German economic output is likely to contract somewhat in the third quarter of 2023, the Bundesbank writes in its Monthly Report. It is unlikely that private consumption will offer any discernible positive impetus. Households are still reluctant to spend despite the slight easing in price inflation, strong wage growth and favourable labour market. In addition, weak industry is weighing on economic output. 

The Bundesbank’s September 2023 Monthly Report takes a look at se-lected aspects of the current dependencies and medium-term challenges for Germany as a business location. It also discusses the question of whether there are heterogeneous effects in the implementation of monetary policy in the euro area. The report further includes an analysis of the reliability of models for short-term economic forecasting during recent crises. Another article describes Member States’ financial relationships with the EU budget and the Next Generation EU off-budget entity in 2022. And finally, the performance of German credit institutions in 2022 is discussed.

The German economy is still experiencing a period of weakness. According to the Federal Statistical Office’s flash estimate, in the second quarter of 2023, seasonally adjusted real gross domestic product (GDP) stagnated at the level recorded in the previous quarter. The current issue of the Bundesbank’s Monthly Report reports that weak foreign demand and higher financing costs are weighing on the economy. The large backlog of orders in industry and construction and abating supply bottlenecks prevented an even weaker development. The sound labour market acted as a tailwind for the economy. 

The August 2023 edition of the Monthly Report comments on the economic situation in Germany in summer 2023.

German economic output is likely to have gone up slightly again in the second quarter of 2023, according to the Monthly Report. Private consumption has stabilised after previously having fallen. According to the experts, the fact that the labour market remained in good shape, wages rose sharply and price inflation did not continue to accelerate contributed to this development. Meanwhile, the decline in foreign demand was a drag on industry and the rise in funding costs dampened domestic investment. The Bundesbank is expecting the economy to recover haltingly later in the year.

The July 2023 issue of the Monthly Report highlights the financial industry’s options regarding digital money. Another article analyses cross-border liquidity flows and links them to the role of the banking system in Germany’s balance of payments. A third text discusses economic developments in emerging market economies. 

The June 2023 Monthly Report projects how the German economy is likely to develop up until 2025. Another article in the report analyses how bank interest rates in Germany change as monetary policy is tightened. A further contribution discusses the growing significance of central government’s off-budget entities.

The May 2023 edition of the Monthly Report comments on the economic situation in Germany in spring 2023.

The April 2023 Monthly Report describes the relationship between money market conditions and the remuneration of government deposits. It also presents the results of the new household wealth survey. In addition, it discusses the impact of the current crises on international payments and how sustainability risks are factored into banking supervision.

The March 2023 Monthly Report describes how the German balance of payments developed in 2022. It also discusses the significance of digitalisation for labour productivity. An additional article covers the profitability and financing of German enterprises in 2021.