Germany's Economic Resilience: A Ray of Hope Amidst Inflation Surge

Germany's GDP rose by 0.2% in the third quarter, defying recession fears, as inflation climbed to 2.4% in October. The economy's resilience was driven by government and household spending, despite high energy costs and global competition. The labor market weakened with rising unemployment.

Germany's economy has shown unexpected resilience, avoiding a technical recession with a 0.2% rise in GDP during the third quarter, largely fueled by government and household spending. This growth comes as a welcome surprise amidst concerns over the country's economic stability.

However, inflation took an upward turn in October, reaching 2.4%, exceeding analysts' predictions. This resurgence interrupts the expected downward trend and raises questions about the recent European Central Bank rate cuts. Core inflation, excluding volatile food and energy prices, also increased slightly to 2.9%.

The labor market paints a less rosy picture, with unemployment rising by 27,000 in October, signaling potential challenges ahead. German automaker Volkswagen is in talks concerning potential job cuts, reflecting broader economic caution. Despite these challenges, economists remain hopeful for gradual stabilization by 2025.

(With inputs from agencies.)