Crisi economica

Germany is still sending signs of recession to all of Europe

Germany is once again sending a message of crisis to the whole of Europe.
Indeed, German output shrank in the third quarter, raising the risk that Europe's largest economy is headed for a recession as it continues to be weighed down by weak purchasing power and higher interest rates.
It is the only major economy that the International Monetary Fund sees contracting this year, reflecting a very complex moment for growth in Europe, now also aggravated by a context of uncertainty and drama due to the war in the Middle East.
How much is GDP falling in Germany? The latest numbers and the gloomy prospects for Berlin.
And of Europe.
Germany heading for recession, Europe in full crisis? Germany's GDP fell 0.1 percent from the previous three months, less than the 0.2 percent decline economists had expected, the statistics office said on Monday, citing a drop in household spending.
The data underlines the German powerhouse's struggle to recover from an energy-induced recession last winter, followed by two quarters of stagnation or minimal growth – according to revised data.
“These numbers alone underline that the German nation has at least become one of the eurozone growth laggards,” said Carsten Brzeski, global head of macroeconomics at ING.
Looking ahead, the current tightening of the European Central Bank's monetary policy, the lack of a reversal of the inventory cycle and new geopolitical uncertainties will continue to weigh on Berlin according to the expert.
“The German economy looks set to remain in the twilight zone between mild contraction and stagnation not only this year but also next year,” Brzeski added.
Bloomberg economist Martin Ademmer highlighted that the German economy continued to languish under higher interest rates, causing external demand to collapse as energy costs more.
Now, however, there are early signs that economic activity may stabilize towards the end of the year, although risks to the outlook remain significantly tilted to the downside.
Higher interest rates domestically and globally are weighing heavily on demand for industrial goods, which Germany relies on more than its peers to fuel growth.
Chemical giant Lanxess AG announced, for example, that it will cut 7% of its workforce this month, while Volkswagen AG said it would double its savings to boost profitability.
While services have held up better, S&P Global corporate surveys show momentum has slowed there too.
Furthermore, cracks are appearing in the job market – another bright spot so far.
According to S&P Global, overall private sector activity continued to contract at the start of the fourth quarter.
Against this backdrop, economic confidence across the Eurozone region slowed for a sixth month, albeit less than expected.
It was dragged down by industry and retail trade, while services recorded an increase.
The horizon is not exactly rosy and Lagarde also reiterated this in her latest press conference, warning that inflation and recovery are not yet under control.
Germany's recent lackluster performance has fueled concerns about its future potential, as it faces an aging workforce, excessive dependence on China and the need for a rapid transition to new energy sources.
Senior officials, including Bundesbank President Joachim Nagel, have warned against excessive pessimism, stressing the country's ability to adapt.
However, they recognized the need for action, with Economy Minister Robert Habeck last week urging decisions to safeguard the nation as a trading destination.

Author: Hermes A.I.

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