Germany Q3 2022 GDP Strong annual growth in 2022

German GDP grew by +0.4% quarter-on-quarter in Q3 2022, indicating that Europe’s leading economy is holding up well in a particularly challenging global context. The performance surprised the consensus, which expected growth to decline in the quarter due to the ongoing pandemic, bottlenecks in global supply chains and rising energy prices linked to the war in Ukraine. . The increase in the quarter was mainly due to the growth of personal consumption expenditures (+1% during the quarter) and investments in machinery and equipment (+2.7%). Households appear to have taken advantage of the lifting of health restrictions to travel and go out more, greatly increasing their spending on leisure, accommodation and food. This behavior was also accompanied by an increase in spending on non-durable consumer goods. On the other hand, public administration spending has stagnated due to the lifting of various restrictions related to Covid-19, resulting in reduced spending on managing hospital beds, vaccines and available tests. In turn, investments in construction decreased for the second consecutive quarter (-1.4%). The trade balance also weighed on growth with a negative contribution of 0.1 points during the quarter. While exports continued to grow at a strong pace (+2% q/q), imports nevertheless advanced at a higher pace (+2.4% q/q), mainly due to sustained foreign industrial orders. Value added increased in industry as a whole and in most service sectors, but decreased in construction. Industry’s favorable contribution comes mainly from the production of automobiles and machinery and equipment, while energy-intensive industries such as chemicals and metallurgy have been more affected by the increase in energy prices. On the services side, the added value in the section “trade, transport, accommodation and public catering” increased significantly (+3.3% q/q).

In addition, the number of employed persons increased by 1.1% in the third quarter, a new record. The number of short-term workers continued to decline and the number of hours worked per person in employment increased by 2.4% (over a year). Wages and salaries rose by 5% (over a year) and disposable income by 8.2%, while household final consumption expenditure at current prices grew stronger (+9.5%), compared to 10.4% in the third quarter of the year. caused a 9.6% decrease in savings rate compared to years ago.

This indicator of the German economy allows it to exceed the level of GDP before the health crisis by +0.3%. The results allow for a positive growth rate of +1.9% for 2022. Nevertheless, the country still has to face accelerating inflation, which exceeded 11% in October, mainly due to energy prices. but also to the diffusion effects noted in the prices of food, goods and services that weaken consumption.

Our opinion – If Germany’s Q3 growth results allow solid annual growth to be consolidated in 2022 (+1.9% positive pass-through), the country will nevertheless face a very sharp increase in prices seen at the end of the year. With inflation in October nearly 4 points higher than in Q3, it is safe to say that households will be more affected by this rapid deterioration in purchasing power, especially since the positive impact on purchasing behavior of the lifting of health restrictions should now clearly diminish. . Although the government coalition has created a “defensive shield” aimed at reducing the energy costs of households and businesses, confidence has already seriously halved and the outlook for activity reported by the Ifo surveys does not give us hope. for a continuation of the current growth rate. The balance of opinion on the growth prospects of German companies, despite a very slight improvement in November, remains very pessimistic six months ahead and continues to suggest a slowdown in growth in the final quarter of this year.

Article published in our weekly magazine Monde on November 25, 2022 – News of the week

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