Germany’s GDP fell 0.1% in the third quarter from the previous three months, the Federal Statistical Office reported on Monday, citing weak purchasing power and higher interest rates.
According to the report, household consumption has declined as high inflation continues to undermine consumers’ purchasing power.
The statistics office, however, has revised the figure for the second quarter to a modest 0.1% expansion, from stagnation. The figure for the first quarter was revised to stagnation, from a previous contraction that had led the economy into recession.
The EU’s largest economy has been grappling with challenges in its manufacturing sector due to higher energy costs. It officially slipped into a technical recession in the first quarter of the year as GDP growth was revised from 0 to -0.3%. A recession is defined as two consecutive quarters of contraction in GDP.
The International Monetary Fund recently forecast that most of the world’s major economies will see growth this year, except for Germany. The IMF cited weakening global trade and soaring energy prices as the key reasons behind the projected slide.
Last month, Deutsche Bank CEO Christian Sewing warned that the struggling German economy could once again be called the ‘Sick Man of Europe’ if structural issues are not addressed immediately.
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