Bundesbank Sees Germany’s Economic Slump Continuing for Now

19 November 2024

By David Barwick – FRANKFURT (Econostream) – German economic weakness is set to persist in the current quarter, the German Bundesbank said on Tuesday in its latest monthly report.

‘The economic slowdown in the German economy will probably continue in the fourth quarter’, the report said. ‘All major demand components currently offer little reason for a noticeable short-term recovery in the German economy.’

Although private consumption and services might make positive contributions to growth, weak investment and industry would hold the overall outcome back, the report said.

‘Demand for German industrial products continues to be weak’, the report said.

‘The long-lasting economic weakness also reached the previously very robust labor market in the summer quarter’, the Bundesbank reported. For now, though, the increase in joblessness was only slight, and leading indicators did not suggest any major changes in the next months, it said.

Inflation would climb again temporarily on energy-related base effects and other special factors, the Bundesbank said.

However, wage growth was likely to ease after growth of 8.8% in 3Q, according to the report.

‘At present, high wage demands are encountering a weak economic environment, which is leading to greater pressure to adjust’, the Bundesbank said. This along with lower inflation should lead to clearly weaker wage settlements ahead, it said.