Germany: economic indicators quarterly changes
Business climate indicators in recent months have been affected by the significant impact of the energy shock, as well as by fears that this shock will get worse during the winter. The difficulties linked to the international context (before China’s economy opened up again) have also hurt the German economy.
A gap has emerged between the data for consumer confidence, which in 2022 was significantly affected by the rise in inflation, and consumer spending, which managed to grow over the first three quarters. However, the annual consumption data published on 13 January suggests a decline in Q4.
Inflation registered a significant fall in December (8.6% y/y after 10% in November), due to the freeze in energy prices by the federal government. However, core inflation has continued to rise, to 5.4% in December after 5.1% in November (harmonised index).
At the same time the tightness in the labour market continued, against a backdrop of low unemployment (5.5%). This tightness penalised production to a significant degree and this increased in 2022 (according to the European Commission survey), affecting one in three companies in industry and three out of 10 in the services sector at the end of 2022.
German growth is not expected to be as bad in the 4th quarter as might have been expected based on the various surveys. These surveys incorporated uncertainties linked to the extent of the shock on energy during the winter, uncertainties which have been partially removed as shown by the relative resilience of industrial production (a factor which the reopening of the Chinese economy should help to strengthen). Annual growth, published at 1.9%, is consistent with our expectation of a decline in growth, which is expected to remain limited to -0.2% q/q in the 4th quarter.
GDP growth q/q: actual, carry-over and forecasts
Stéphane Colliac
