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cailianshe news, september 19 (editor: shi zhengcheng)the german economy, which has been struggling on the brink of economic contraction for nearly two years, seems to be finally about to officially enter a recession.

the german central bank said in its monthly report released on thursday thatthe country's gdp growth "is likely to stagnate or decline slightly again in the third quarter"in its previous report in august, the german central bank had expected the economy to grow slightly in july-september this year.

(source: x)

the change in expectations here will bring about an important moment of change - the german economy will officially enter a technical recession.

according to the recession standard of "negative gdp growth for two consecutive quarters",germany has been at the critical point of crossing this standard since the end of 2022, and its quarterly gdp growth rate has been evenly arranged according to "one month up, one month down"., and is always just a little bit away from recession. for example, the economy shrank by 0.4% and 0.1% quarter-on-quarter in the first and third quarters of this year, respectively, but rebounded by 0.2% in the second quarter.

(germany's gdp quarterly growth rate, source: tradingeconomics)

combined with the previous report by cailianshe that "volkswagen intends to close its german factory for the first time in history", the pillar industry is willing to offend local workers in order to "reduce costs and increase efficiency", which is enough to show the current situation of the german economy. the latest news also shows that intel has postponed its large-scale investment in building a chip factory in germany.

don't be too pessimistic

the german central bank also said in the report that the country's economy is "still navigating volatile waters", and the reasons for the downward revision of economic growth expectations include:manufacturing and construction sectors had a “weak start” in the third quarter, coupled with weak consumer spending.

economists pointed out that increasing economic policy uncertainty has put pressure on corporate investment activities, while rising financing costs have also suppressed demand for various goods and services. the central bank said,although demand for industrial products has rebounded, it is not enough to alleviate the overall industry's order shortage。

at the same time,indicators such as private car registrations also show that german consumers are still restraining their spendingthe good news is that the outlook for the labor market remains stable and wage growth is expected to outpace inflation. the bundesbank expects the increase in purchasing power to be gradually reflected in private consumption.

in line with the ecb's judgment, the german central bank currently expects that after the year-on-year growth rate of the "harmonized consumer price index" fell to 2% in august, inflation figures will rise again in the coming months, which is also related to the significant drop in energy prices last fall.

regarding the impending recession, economists from the german central bank also emphasized in their report thata significant, widespread and sustained economic recession is unlikely in the country at this point.germany's economy shrank by 0.3% in 2023, making it the only country in the g7 group to experience economic contraction.

german central bank president nagel stressed that germany's business position should not be downplayed, but of course this does not mean that we should not point out weaknesses and address them decisively.

nagel also said that if the forecasts of economic research institutions are of any reference value, then the german economy will be more or less stagnant in 2024. the german central bank expected in june that the german economy will grow by 0.3% in 2024, and the next forecast will not be released until december this year.