Germany dodges recession, posts surprise growth on spending boost

BERLIN

Germany's economy unexpectedly grew in the third quarter, avoiding a technical recession, federal statistics office Destatis reported Wednesday.

Gross domestic product expanded 0.2 percent quarter-on-quarter, Destatis said, on the back of rising government spending and household consumption.

The government had been expecting "a renewed, slight decline" after output fell in the second quarter.

Germany's industrial sector continues to struggle, with Volkswagen reporting sharp profit declines and warning of urgent cost-cutting needs recently.

The country also faces structural challenges including bureaucracy, infrastructure underinvestment, an aging workforce, and a costly green transition.

The IMF has called for structural reforms and increased public investments, suggesting relaxation of the debt brake.

Germany was the only major advanced economy to shrink in 2023, with another mild contraction expected in 2024 before recovery begins in 2025.

In a broader context, the eurozone economy grew more than expected in the third quarter. The EU's official data agency reported that the 20-country single currency zone recorded growth of 0.4 percent over the July-September period, buoyed by Germany's unexpected performance.