The German economy is estimated to have grown unexpectedly in the third quarter, following a contraction, thus averting a recession. The nation’s export-driven economy has faced challenges due to declining industrial orders.

Germany's federal statistics agency, Destatis, released its quarterly estimate of the country's Gross Domestic Product (GDP) on Wednesday.

The report indicated a modest growth of 0.2% in the third quarter of 2024, recovering from a contraction of 0.1% experienced in the second quarter.

As Europe's largest economy, Germany has faced challenges due to declining industrial orders, which have adversely affected its export-oriented economy. The situation has been exacerbated by reduced demand, rising raw material costs, and increasing energy prices, all contributing to a sluggish market environment.

The estimated growth in the third quarter means that Germany has narrowly avoided entering a recession, which is typically defined as experiencing two consecutive quarters of economic contraction. The figures were unexpected, as the government had anticipated a slight decline following the downturn in the second quarter.

German Economy Minister Robert Habeck commented, "This is still far from what we need, but at least it is a ray of hope." He noted that the economy has proven to be more resilient than many had forecasted, and the anticipated technical recession has not occurred.

In addition to GDP figures, Destatis reported on unemployment, which remained relatively stable compared to the previous month, affecting approximately 2.8 million individuals, or 6% of the workforce. Andrea Nahles, head of Germany's Federal Employment Agency, remarked that the usual autumn increase in employment numbers "had failed to materialize this year."

Experts noted that this marks the first time in two decades that unemployment has not seen a noticeable decline in the final months of the year. Nevertheless, Germany's unemployment rates continue to be relatively low in the long term.