Frankfurt: Germany’s economy unexpectedly grew in the third quarter, according to official data, but weaker growth in France and Spain fueled fears that high inflation and the energy crisis could plunge the region into recession. rice field. Europeans are gearing up for a difficult winter as Russia cuts gas supplies in the wake of the Ukraine war, sparking fears of energy shortages and exacerbating cost-of-living pressures for millions. Despite a strong outlook, Germany surprised analysts with a quarter-on-quarter growth of 0.3%, driven mainly by consumer spending.
Meanwhile, France and Spain reported growth of 0.2% respectively from July to September, slowing significantly from 0.5% and 1.5% growth in the previous quarter. Federal Statistical Office Destatis said of preliminary data, “Despite the ongoing coronavirus pandemic, supply chain disruptions, rising prices and the war in Ukraine, the German economy was able to maintain its position.” said. Germany grew just 0.1% in the second quarter, and analysts had expected Europe’s largest economy to contract her 0.2% in the third quarter.
But economists warned that Friday’s data only provided a temporary respite and that a recession was looming as Russia’s war in Ukraine has sent food, especially energy, costs skyrocketing.19 Consumer price growth in the country’s eurozone jumped to a record 9.9% in September, further depressing household incomes and pushing up costs for businesses. “Today’s positive growth data is a welcome surprise. But that doesn’t mean the German economy can prevent a recession.” There is none.”
“Last Hurray”
Germany, whose energy-hungry industry plays a key role in its export capacity, was heavily dependent on Russian gas before the war and has been hit harder than any other EU country by Moscow cuts. The German government expects the economy to shrink by 0.4% in 2023. Adding to the country’s woes, Destatis said on Friday that Germany’s annual inflation rate rose again to her October high of 10.4%, above his September high of 10%. The country’s largest trade union, IG Metall, called on workers in the metal and electronics industries to go on strike from Saturday demanding an 8% wage increase as inflation eats into their salaries.
In France, the EU’s second-largest economy, strong business investment helped maintain momentum, but the post-lockdown boost in the services sector is fading, analysts said. Allianz Trade economist Maxime Darmet said weak growth in France in the third quarter could be “the last hooray before the recession”. And with consumer prices in France soaring to 6.2% this month, the highest level since 1985, households “will feel a serious drop in purchasing power,” Mr Darmet said.
French President Emmanuel Macron supports households through difficult times in a rare television interview after the country was held back by weeks of strikes over wages by oil refinery and fuel depot workers. In Spain, the main reason for the slowdown in growth was the poor performance of the real estate sector, where activity contracted by 2.5% and exports and business investment fell. ING economist Wouter Thierry said only a strong tourist season and strong domestic demand kept the economy out of recession.
Meanwhile, the Austrian economy contracted by 0.1% in the third quarter, according to the Austrian Institute for Economic Research (WIFO). But with many of the country’s indicators flashing red, “we expect the Spanish economy to enter a mild recession over the next two quarters,” he said. The European Central Bank on Thursday announced another big rate hike to combat inflation, but acknowledged that higher borrowing costs would deepen economic pain. European Central Bank (ECB) President Christine Lagarde said the possibility of a recession in the eurozone was “very close”. – AFP
