German GDP 2023 Fell – A Detailed Economic Performance for Q3

The third quarter of German GDP 2023 witnessed a 0.1% decline in compared to the previous quarter, as revealed after adjusting for price, seasonal, and calendar variations, according to the Federal Statistical Office (Destatis). Ruth Brand, President of the Federal Statistical Office, notes this decline follows a sluggish economic trend in the first half of 2023, indicating a modest start to the latter half of the year. The GDP figures remain in line with the initial release on October 30, 2023.

Key Highlights:

1. Q3 2023 GDP declined by 0.1%, reflecting a slow start after a stagnant first half.
2. Divergent sectoral performance: Construction up by 1.2%, industry down by 3.8%.
3. Yearly comparisons: Consumption fell by 2.0%, trade dropped (exports: -3.8%, imports: -5.7%), but employment rose by 0.7%.
4. Household spending dipped by 2.0% due to high prices, while government spending saw a positive shift.
5. Germany’s Q3 2023 GDP (-0.4%) trailed the EU average, contrasting with the US’s +1.2% growth.

German GDP 2023 Quarter Economic Shifts

The initial two quarters of 2023 showcased a nearly stagnant economic scenario, with the first quarter recording 0.0% growth and a slight 0.1% increase in the second quarter.

In contrast, the third quarter reflected a downturn in final consumption expenditure while witnessing positive strides in gross fixed capital formation.

Consumption Expenditure and Capital Formation

Final consumption expenditure retained its level, hovering at -0.1% compared to the previous quarter, with household expenditure marking a decrease of -0.3%. Interestingly, government final consumption expenditure experienced a modest increase of +0.2%, a positive shift after more than a year. Moreover, the notable boost came from gross fixed capital formation, particularly in machinery and equipment by 1.1% and construction by 0.4%.

Foreign Trade German GDP 2023

However, the third quarter displayed a decrease in foreign trade. Both exports and imports saw a decline, with goods and services exports falling by 0.8% and imports plummeting further at -1.3% compared to the second quarter of 2023.

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Sector-Wise Performance

The gross value added in different sectors varied in the third quarter. While the overall gross value added increased by 0.1%, sectors witnessed diverging trends. Notably, the industry (excluding construction) faced a significant downturn of 1.3%, particularly in the energy supply sector and manufacturing, which experienced a 0.9% decrease due to reduced production of motor vehicles, trailers, and semi-trailers. In contrast, construction marked a 0.4% rise, and most service branches displayed an upward trajectory. Notably, trade, transport, accommodation, and food services witnessed a substantial +1.7% increase, alongside financial and insurance activities at +1.1%. However, the public services, education, health sector experienced a 0.2% decline in gross value added.

Yearly German GDP Comparison

Comparing the third quarter of 2023 with the same period in 2022, GDP saw a price-adjusted decline of 0.8%. However, after price and calendar adjustments, the decrease lessened to -0.4%, attributed to one fewer working day compared to the same period a year earlier.

The year-on-year analysis of the third quarter of 2023 showcases significant shifts in various economic sectors, highlighting declines in final consumption expenditure and foreign trade alongside varied sectoral performances.

Consumption Expenditure Trends

Household final consumption expenditure, adjusted for prices, observed a noteworthy 2.0% decrease compared to the previous year. This decline is notably attributed to elevated prices affecting spending on essentials like food, beverages, accommodation services, and clothing. In contrast, positive indicators emerged from the transport sector due to increased purchases of passenger cars. Government final consumption expenditure also experienced a year-on-year decline (-1.6%, price adjusted), notably in central government spending, primarily due to reduced expenditure on Covid-19 vaccines compared to the same period in 2022.

Capital Formation and Domestic Uses

Gross fixed capital formation in machinery and equipment displayed a 1.1% increase year on year, particularly in commercial vehicles. However, construction witnessed a 1.0% decrease after price adjustment, mitigated partially by positive trends in building completion work and moderate construction price increases. Overall, domestic uses saw a 1.7% price-adjusted decline in the third quarter of German GDP 2023 compared to the same period in 2022.

Decline in Foreign Trade

The third quarter of 2023 marked substantial year-on-year decreases in foreign trade. Exports of goods and services fell by 3.8% (price adjusted), with an even more significant drop in imports (-5.7%), mainly due to substantial declines in goods imports, particularly in mineral fuel imports.

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Sectoral Performance Variations

The overall price-adjusted gross value added in Q3 2023 recorded a 0.7% decrease compared to the same period in 2022. Notably, the industry witnessed a considerable decline of 3.8%, especially in the energy supply sector. However, construction marked a positive increase of +1.2%, attributed to civil engineering and building completion work. In the service sector, while information and communication, other services, real estate activities, and business services showed positive trends, public services, education, health, and trade, transport, accommodation, and food services displayed declines in economic performance.

Employment Records and Productivity Trends

Despite the economic fluctuations, employment reached a new high, increasing by 0.7% compared to Q3 2022, totaling approximately 46.0 million persons in employment in Germany. However, the usual autumn upturn in the third quarter was somewhat lower than the previous year. Average hours worked per person in employment decreased by 0.7%. Labour productivity witnessed a 0.8% fall on a year-on-year basis.

German GDP 2023 Income and Consumption Trends

At current prices, GDP and gross national income saw notable increases of 6.0% and 6.4%, respectively, compared to the previous year. Compensation of employees increased by 6.9%, while household final consumption expenditure rose by a smaller margin of 3.8%. This increase led to a higher savings ratio in German GDP 2023 (10.3%) compared to the previous year (9.6%) due to stronger growth in disposable income than in consumption expenditure.

International Economic Comparisons

Germany’s economic performance in Q3 2023 stood below the EU average, with a -0.4% GDP change compared to the same period a year earlier. The economic landscape in other major EU countries also reflected varying degrees of stagnation or slight growth. The United States outperformed, registering a marked GDP increase of +1.2%.

German GDP 2023 Revision of Previous Results

The Federal Statistical Office revised the Q3 2023 GDP figures marginally based on additional statistical information. The recalculations resulted in slight revisions without significant deviations from the previously published data. For detailed recalculated data, refer to the “Comparison between old and new figures” table in this press release.