BERLIN — The German economy ministry said on Monday that the country’s overall economic momentum has begun to lose steam at the start of the third quarter. The slowdown is linked to a retreat in the recent boom of energy‑intensive sectors and a dip in private consumption, both weighed down by higher energy prices.
Energy‑intensive industries lose their edge
The ministry’s monthly report notes that the special economic cycle that had lifted energy‑intensive industries – such as steel, chemicals and heavy manufacturing – was largely driven by a surge in foreign demand tied to the conflict in the Middle East. That demand, however, appears to be weakening as the conflict’s impact on global supply chains eases and buyers become more cautious.
“The surge in foreign orders that previously propelled our energy‑intensive sector is now receding,” the report states. The decline is reflected in lower production figures for key industries that had previously posted double‑digit growth.
Household spending feels the pinch
At the same time, indicators for private consumption point to a loss of momentum. German households continue to face “persistently high” energy prices, which have squeezed disposable income and reduced spending on non‑essential goods and services.
Analysts cited by the ministry warn that if energy costs remain elevated, the drag on consumer confidence could deepen, further slowing the economy’s recovery.
What this means for the broader economy
While the report does not forecast a recession, the combination of a cooling industrial sector and weaker household demand signals that Germany’s post‑pandemic rebound may be more modest than earlier hoped. The ministry emphasizes that the overall outlook remains cautiously optimistic, noting that other sectors – such as automotive exports and services – continue to perform solidly.
Policy makers are urged to monitor energy price developments closely and consider measures that could alleviate the cost burden on both businesses and families. The ministry suggests that a stable energy supply and competitive pricing are essential to sustaining the momentum that Germany has built over the past year.
Looking ahead
Future reports will track whether the slowdown is a temporary blip or the start of a longer‑term trend. The ministry plans to release its next monthly update in October, which will include more detailed data on industrial output, export volumes, and consumer confidence.
For now, the German economy appears to be navigating a delicate balance: maintaining growth while managing the lingering effects of high energy costs on both producers and consumers.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
