Bundesbank: German economy enters temporary stagnation in the third quarter

According to the Bundesbank's October report, following 0.3 percent growth in the spring period, the German economy entered a temporary stagnation process in the July-September period, and inflation reached 3.3 percent in September.

The October report published by the Bundesbank stated that growth in the German economy has stalled and inflation has reached a 3-year high. Among the main reasons for the stagnation in growth were cited as low water levels in the Rhine River, high energy prices, and special effects related to fuel discounts. It was reported that private consumption did not make a significant contribution to growth in the third quarter because high energy costs suppressed household purchasing power.

It was determined that the automotive sector performed weakly in industrial production in August and that factory holidays coinciding with August this year negatively affected production. Logistics restrictions on waterways, particularly the Rhine River, which made transportation difficult and increased costs, became one of the main reasons for the significant weakness in foreign trade. Although a partial recovery was observed in the construction sector in August, it was predicted that rising mortgage interest rates would limit growth in the long term.

It was warned that the inflation rate, which rose to 3.3 percent in September, will remain high in the coming months, and the effects of the energy shock on industrial products, food, and the service sector will become more pronounced. It was stated that economic output could increase again in the fourth quarter, but a lasting recovery depends on developments in the Middle East.