Following marked falls in new orders and production in September compared with previous months, concern is rife that the German economy will shrink in the fourth quarter of this year. Although this cannot be ruled out given the detrioration in export expectations and the related reluctance of businesses to invest, we still think it more likely that gross domestic product will stagnate or even see minimal growth in the final quarter. With mineral oil prices tending downwards, inflation is likely to ease towards the end of the year, bolstering real incomes. With consumers in fairly upbeat mood, Christmas turnover is likely to be brisk. For 2012 as a whole we are still penciling in economic growth of 0.8% in Germany.