German economy shrinks slightly in Q3

Germany’s economy shrank slightly in the third quarter, data showed on Monday, as Europe’s largest economy continues to be weighed down by weak purchasing power and higher interest rates.

Gross domestic product fell by 0.1% quarter on quarter in adjusted terms, the federal statistics office said.

A Reuters poll had forecast the economy to shrink by 0.3%.

The statistics office, however, revised the figure for the second quarter to a modest 0.1% expansion, from stagnation.

The figure for the first quarter was revised to stagnation, from a previous contraction that had led the economy into recession. A recession is defined as two consecutive quarters of contraction in GDP.

Household consumption fell in the third quarter, as high inflation continued to erode consumers’ purchasing power.

Due to base effects in food and energy prices, Germany’s headline CPI rate is expected to fall further in October. Inflation data will be published later on Monday.

On the other hand, capital investment made a positive contribution to GDP, the statistics office said.

German economy shrinks slightly in Q3