Wachstumskurve mit Kugelschreiber symbolisiert die wirtschaftliche Lage.

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  • On 12 October, Federal Minister Habeck submitted the autumn projection to the Federal Government.
  • Prospects for growth in Germany have significantly deteriorated. The reason for this is the breach of all gas supply agreements on the part of Russia, which has led to persistently high energy prices in Europe.
  • The Federal Government still expects growth of 1.4% this year. In 2023, economic output is likely to decline by 0.4%.
  • The rate of inflation will remain at a high level of 8% in 2022 and 7% in 2023. Without the measures of the economic shield, it would have been even higher.

  • Cyclical indicators suggest that a difficult winter lies ahead for the German economy.
  • Industry suffered another setback. In August, both production and new orders declined.
  • Retail sales continued their downward trend in August. In view of sharp price increases, the consumer climate continued to point downwards.
  • The rate of inflation increased to 10.0% in September, its highest level since December 1951. Contributing factors were the end of the reduction in the energy tax on motor fuels and of the nine-euro public transport ticket.
  • The situation on the labour market remains stable. While the leading indicators have dropped, they do suggest that despite an impending recession, companies will retain their employees.
  • German local courts reported a total of 7,113 corporate insolvencies filed in the first half of 2022, 4% fewer than in the first half of 2021. Current leading indicators and surveys are suggestive of a turnaround in the number of, at present declining, insolvency cases, but a “wave of insolvencies” is not in sight.


In the autumn projection of 12 October, the Federal Government revised its growth prospects for Germany substantially downwards in comparison to the spring projection. An upturn of 1.4% is still expected in 2022; this is, however, mainly the result of the solid and unexpectedly positive first half of the year. In contrast, in 2023 the Federal Government expects economic output to decline by 0.4%. Germany is thus facing a recession.

The cyclical indicators for August and September support the view that the economic situation has sharply deteriorated in light of the end to gas deliveries from Russia. For example, new orders and production declined in August. Energy-intensive industry disproportionally scaled down production. The ifo Business Climate Index also declined, particularly because business expectations took a hit. There was still a small nominal increase in foreign trade, which in real terms, however, is likely to disappear – the reason continues to be significant price increases.

These are also reflected in consumer prices. The rate of inflation was at 10% in September. This was its highest level since December 1951. The end of the reduction in the energy tax on motor fuels and the nine-euro public transport ticket, meaning that these measures are no longer lowering prices, are likely to have contributed to the high increase as compared with the previous month (August: +7.9%).

According to its autumn projection, the Federal Government expects a recession this winter and three negative quarters in succession, starting with the third quarter of 2022.

One element of positive news here is that, based on the current situation, the recession will have little impact on the labour market. This is because companies will do all they can to retain their employees in times of skills shortages and even recruit new qualified workers in a targeted manner. The labour market thus remains resilient in the crisis. The increase in the minimum wage is supporting low-income households. The most recent increases in unemployment are almost exclusively the result of the migration of refugees fleeing Ukraine.


The hard indicators on the global economy only become available with a delay of three months. In July, global industrial output declined slightly by -0.7% compared with the previous month, while world trade remained positive with a rate of change of +0.7%. The latest indicators of sentiment signal a stabilising of the global economic situation at a low level. The S&P Global index (formerly IHS Markit) remained below the 50-point growth threshold in September, although it minimally increased compared with the previous month. Growth in the services sector offset a decline in the manufacturing sector. The survey respondents anticipate a difficult global economic environment in the coming months.


In seasonally adjusted terms, nominal exports of goods decreased by 0.3% in August compared with the previous month. In contrast, nominal imports increased by 2% compared with July. Steep price increases, however, are likely to mean that the nominal growth is significantly lower in real terms.
The deterioration in the terms of trade due to the energy price crisis is increasingly reflected in the current account surplus. In ten of twelve months, stronger growth was recorded for imports than exports in nominal terms. In the course of this development, Germany’s monthly trade surplus significantly decreased. In August 2022, the increase amounted to €3.4 billion; in the same month of the previous year, it was more than six times higher at €21.1 billion.
Despite the positive August, the outlook for foreign trade is rather pessimistic: survey-based indicators of sentiment suggest that expectations have recently become gloomier. The S&P Global index fell below the important 50-point growth threshold in August. Export expectations also continued to fall in September. At -6 balance points, they are now at a level that, in recent times, has only been lower during the first wave of the COVID-19 pandemic in the spring of 2020.

Signs of recovery from the shortage of materials, which was noticeable in recent months, also slowed slightly in August. There seems to be no further improvement in the situation, in German industry at least. According to ifo surveys, around 78% of companies are still reporting shortages in procurement. This stands in contradiction to the global situation, where falling container freight rates are signalling an easing in the shortage of materials.


Production in the goods-producing sector decreased slightly by 0.8% compared with the previous month. While output in the industry remained almost unchanged (-0.1%), the construction and energy sectors saw declines of 2.1% and 6.1% respectively.

Following setbacks in July, the two important industrial sectors, automotive/automotive parts and mechanical engineering, registered significant increases of 2.8% and 2.2% respectively in August. Noticeable decreases in production were, however, reported by the energy-intensive sectors of chemical products (-3.1%), glass, glassware and ceramics (-2.8%), as well as coke ovens and mineral oil processing (-4.5%).

Adjusted for seasonal factors, new orders dropped by 2.4% in August compared with the previous month. Following a revision of data, an increase of 1.9% was still reported in July. Excluding large-scale orders, they rose by 0.8%. Overall, according to recent figures, orders stood at 4.1% below the preceding year’s level. The decline from the preceding month was due to lower demand for intermediate and capital goods (-4.2% and -2.4% respectively). Manufacturers of consumer goods, in contrast, registered an increase of 5.2%. Domestic orders were down by 3.4%. Foreign orders shrank by 1.7%. Here, demand from the eurozone fell more sharply than new orders from the non-eurozone ( 3.8% and 0.4% respectively). At sectoral level, there were sharp falls in orders for “other vehicles” ( 45.7%) and for electrical equipment ( 16.0%). In contrast, the important areas of automotive/automotive parts and mechanical engineering registered increases in new orders of 4.7% and 3.8% respectively. There were also tangible increases in orders for pharmaceutical products (+6.8%) and in the field of computer/optical products (+2.5%). In contrast, there was less demand for chemical products ( 3.4%).

In light of Russia’s war of aggression against Ukraine and high gas and electricity prices, industrial activity has taken a hit. The restrained outlook for the rest of the year is also reflected in a cooler business climate and cautious export expectations. Recently, the results of the ifo Business Climate Survey showed a historically large gap between pessimistic expectations and the comparatively moderate assessment of the current situation. The massive uncertainty currently facing economic operators is also manifested here.


Retail turnover (excluding vehicles) continued its downward trend in August and decreased by 1.3% against the preceding month, following a slight rise of 0.7% in July. Thus, it was 4.3% below its pre-year level, according to the latest figures, largely due to the high increases in the retail price level. In nominal terms – i.e. unadjusted for prices – turnover increased by 5.4% over the year. The trade in foodstuffs registered a decline of 1.7% in real terms in May compared with the preceding month (-3.1% down on the same month the year before). Trade in textiles, clothing, shoes and leather goods reported a fall in turnover of 1.1% (-5.9% down on the same month year before). E-commerce and mail order services experienced a downturn of 7% (-7.1% down on the same month the year before). Petrol stations, however, saw a rise of 14% in August before the end of the reduction in fuel duty, the largest increase in turnover since the beginning of the time series in 1994 (+12.6% up on the same month the year before). Turnover was thus 24.5% above the level prior to the start of the reduction in fuel duty in May. New registrations of passenger cars by private owners rose sharply by 17.9% in September, following an increase of 13.1% in August.

According to the GfK Consumer Climate Survey, consumer sentiment continues on a downward trend. A further decline to a new historic low is expected in October. The ifo business expectations for the retail trade also deteriorated further in September. In the meantime, the balance of the figures reported remains at a very low level.


The rate of inflation, i.e. the rise in the price level within the space of a year, rose again in September to 10.0%. This is its highest level since December 1951. Back then, high inflation rates were caused by scarcity in the supply of goods shortly after the currency reform. The rate in September 2022 rose by 2.1% compared with the previous month (August: +7.9%). The core inflation rate (excluding foodstuffs and energy) was again at less than half of the overall rate at +4.6%, but at a record level since December 1993 (August: +3.5%).

The rise in prices of fuel was still high (+43.9%; August: 35.6%). The rise in food prices hit a new post-reunification record at +18.7% (August: +16.6%). Here in particular, upstream prices increases put upward pressure on prices. In August, producer prices rose by +45.8% in year-on-year terms, representing the highest rate since the survey was started in 1949. Compared with the preceding month, they increased by 7.9%. In year-on-year terms, import prices rose sharply by +28.9% in July. In contrast, the increase in wholesale selling prices was weaker in August (compared with August 2021: +18.9%; compared with July 2022: +0.1%).

The end of the nine-euro public transport ticket and of the reduction in fuel duty contributed to the further increase in the rate of inflation. High inflation rates are also expected to continue in the coming months. Brakes on the prices of gas and electricity will thereby be implemented in such a way that they alleviate price increases.


The situation on the labour market remains stable. The usual autumn pick-up, however, is turning out to be relatively weak in view of global uncertainties. The rise in unemployment rates has subsided and was at 14,000 people in September. The increases over recent months were mainly the result of the migration of refugees fleeing Ukraine. Ukrainian refugees have been included in the German social security system since June. Therefore, the number of unemployed people registered in Book II of the Social Code rose more sharply, by 4,000 people in September. In contrast, there was a decrease of 6,000 people in Book III of the Social Code. Gainful employment stopped growing in August for the first time in a while (-4,000 people). Employment in jobs subject to social security contributions was up in July (+16,000 people). The increase in the minimum wage to twelve euros is stabilising low-income households. The number of people on short-time work continued to decline to around 0.1 million in July. Leading indicators have declined but continue to indicate stable development. New employees are still being sought in the services sector, and overall, companies are trying to retain employees in view of the shortage of skilled workers, even though the German economy is facing a recession.


The downward trend in corporate insolvencies over the past two years continues, while the figures reported so far in 2022 remain below the previous year’s level. According to the final data provided by the Federal Statistical Office, German district courts reported a total of 7,113 corporate insolvencies filed. This was 4% lower than the figure reported in the first half of 2021 (-21% down from the first half of 2020).
As an early indicator, the number of regular insolvencies filed gives an indication of the future development of corporate insolvencies. According to preliminary data provided by the Federal Statistical Office, the downward trend seen most recently in June (-7.6%) and July (-4.2%) did not continue in August (+6.6% over the previous month). Experts at the German Economic Institute (IW) in Halle expect the number of insolvencies to rise in the coming months; a “wave of insolvencies”, however, is not currently expected. Nevertheless, the implications of the war in Ukraine and the sharp rise in energy prices are a major burden for many companies and it is difficult to assess its impact in terms of future insolvencies over the course of the year.
[1] This report is based on data that were available as of 12 October 2022. Unless stated otherwise, these are rates of change against the respective preceding period on the basis of price-adjusted figures which have also been adjusted for calendar-day and seasonal variations.