Germany’s economy grew in the three months to the end of September, ending fears that Europe’s largest economy would slip back into recession.
Predictions that the German economy would shrink for a second consecutive quarter proved unfounded as gross domestic product increased by 0.2% in the third quarter after a 0.3% contraction in the previous quarter.
Germany’s minister for economic affairs, Robert Habeck, said: “This is still far from what we need, but at least it is a ray of hope.”
Growth in Germany lifted the wider eurozone economy, which expanded by 0.4% in the third quarter, twice the 0.2% rate predicted by economists.
Economists said the inflation shock that followed Russia’s invasion of Ukraine – sparking a dramatic increase in energy and food prices that undermined business and consumer confidence across the eurozone – was beginning to ease.
Alexander Krüger, the chief economist at the private bank Hauck Aufhaüser Lampe, said: “Under the weight of many structural weaknesses, the economy is sending out a sign of life. This is thanks to the consumers, who have let their guard down a little.”
The consultancy Oxford Economics said the available information suggested most of the growth across the eurozone came from household and government spending, while investment continued to be restricted by high interest rates.
France’s economy expanded by 0.4%, up from 0.2% in the second quarter, thanks to a boost from the Olympic Games in the summer, while Spain marked itself out as Europe’s growth hub, growing by 0.8%, largely due to a surge in tourism.
Only Italy was among Europe’s large economies to stagnate in the third quarter.
Giorgia Meloni’s government is officially forecasting the Italian economy will grow by 1% this year, but after downward revisions to the first two quarters, the economy minister, Giancarlo Giorgetti, said this month that the goal may be out of reach.
Moody’s Analytics’ senior economist, Kamil Kovar, said the figures put to rest any questions of whether the eurozone was in recession. “It is not, and such worries were always overblown.
“That said, there is a clear continuing weakness in investment, suggesting that worries about the outlook are not completely misplaced.
“We believe that today’s release, together with the rebound in inflation, will shut down any talk about [a] jumbo-sized cut at the December European Central Bank meeting, and we also remain skeptical about expectations of a rate cut in January.”
