German GDP falls as CPI slows

alemania brandenburgo

Bankinter| Germany’s economy and inflation surprised positively in 3Q23. GDP declined -0.3% year-on-year in the period compared to -0.7% expected and +0.0% previous (it was revised up from -0.2%). On a quarter-on-quarter basis, growth was -0.1% compared to -0.2% expected and +0.1% previously (revised from +0.0%).

On the CPI side, the headline rate rose by +3.8% year-on-year compared to +4.0% expected and +4.5% previously. On a month-on-month basis, inflation was +0.0% vs +0.2% expected and +0.3% previous. The core rate also moderates to +4.3% from +4.6% previously.

Assessment: Positive data. Of note is the upward revision of Q2 GDP (coming out of negative territory) and a smaller than expected fall in Q3, showing a less weak economy than expected. On the other hand, inflationary pressures continue to cool, which is good news in view of the European reading that will be released today. Both references provide arguments for the ECB to continue to maintain rates at its next meeting on 14 December.

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