Europe’s biggest economy narrowly avoids recession

By CNN Newsource

Published October 30, 2024 3:12 AM

By Hanna Ziady, CNN

London (CNN) — Germany escaped a recession in the third quarter, official data showed Wednesday, offering some relief to Europe’s biggest economy as its fortunes falter.

Gross domestic product rose 0.2% in the July-to-September period driven by an increase in government and household spending, following a 0.3% contraction in the three months prior, according to Germany’s Federal Statistical Office (Destatis). Destatis revised down GDP figures for the second quarter from -0.1% previously.

Germany’s economy shrank last year for the first time since the onset of the Covid-19 pandemic. The outlook isn’t much brighter: the International Monetary Fund sees zero economic growth this year, marking the weakest performance among major economies.

A sharp drop in profit at Volkswagen only intensified the bad news on economic growth. The troubles facing the German economy are captured by the crisis at the country’s largest manufacturer, which could close factories in its home country for the first time in its 87-year history and cut thousands of jobs.

Volkswagen said Wednesday that operating profit for the nine months to the end of September fell 21% on the previous year to €12.9 billion ($14 billion), hurt by poor performance at its flagship brand and restructuring costs.

This is a developing story and will be updated.