BERLIN, Sept 28 Reuters Five economic institutes are predicting gross domestic product GDP in Germany will contract by 0.6 in 2023, as rising interest rates take their toll on the economy and high inflation depresses consumption.

Growth of 0.3 had been expected in the institutes39; spring forecast.

The forecast confirms the numbers Reuters previously reported exclusively earlier this week.

The most important reason for this revision is that industry and private consumption are recovering more slowly than we expected in spring, said Oliver Holtemoeller, vice president and head of the macroeconomics department at the Halle Institute for Economic Research IWH.

Business sentiment has recently deteriorated again and overall, the indicators suggest that production fell noticeably in the third quarter of 2023, the economic institutes said.

GDP is expected to shrink by 0.4 in the third quarter, following stagnation in the second quarter.

However, wage increases have followed the price hikes, energy prices have fallen, and exporters have partially passed on their higher costs, meaning that purchasing power is returning, economists said. Therefore, the downturn is expected to subside by the end of the year.

In the last quarter of the year, growth is forecast to pick up again, with a modest 0.2 expansion.

For 2024, the institutes four German and one Austrian forecast GDP growth of 1.3, down from 1.5 previously. For 2025, a 1.5 GDP expansion is forecast.

In the following…