Weak foreign demand and high interest rates are putting a strain on Europe’s industrial powerhouse.
The central bank’s dismal outlook fuels concerns that Germany will drag down the economic performance of the eurozone this year.
After preliminary estimates suggested that the economy recorded zero growth in the second quarter of 2023, the outlook for the July-September period was not much better, the Bundesbank said in its monthly report.Europe’s largest economy is “still lacklustre” and “still experiencing a period of weakness”, it added.
Germany’s key industrial sector, traditionally a driver of growth, has been hit particularly hard in recent months as exports have plummeted against a backdrop of high inflation and subdued global activity. While economic activity in the United States, a major trading partner, was in “comparatively good shape,” the bank noted that key client China’s post-Covid recovery had “quickly lost momentum”.
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