Eurozone Inflation Fall Expected as Germany Economy Shrinks Slightly in Q3

Germany’s economy shrank by O.1% in the gross domestic product in the quarter according to the Federal Statistics Office.

The shrink in the GDP can’t be said to be an outlier because Commerzbank awaits the contraction of the German economy in the winter half-year.

“These data alone underline that the German economy has at least become one of the growth laggards of the euro zone,” Carsten Brzeski, the global head of macro said.

“Looking ahead, the ongoing pass-through of the European Central Bank’s monetary policy tightening, still no reversal of the inventory cycle and new geopolitical uncertainties will continue weighing on the German economy.

“The German economy looks set to remain in the twilight zone between minor contraction and stagnation not only this year but also next year,” Brzeski said.

“Consumption is unlikely to recover as optimists had hoped,” Commerzbank’s chief economist Joerg Kraemer said.

In addition, Spain experienced 12 months of inflation at 3.3% in September then 3.5%.

The inflation surge in the Eurozone is expected to reduce from 4.3% in September to 3.2% in October.

“The net result, however, is that Germany’s economy is now firmly stuck in the mud,” Economist Claus Vistesen said.