Goldman Sachs Global Economics Analyst Exhibit 14: The Easing in Pandemic Supply Constraints Has Roughly Offset the Decline in Energy-Intensive German Industrial Production Percent change GermanIndustrial Production Percentage point since Dec. 2019 Automotive Sector (Right) contribution 3 Other Sectors (Right) 3 2 Gas-Intensive Sectors (Right) 2 Chip-Intensive Sectors (Right) 1 Total (Left) 1 0 0 -1 -1 -2 -2 -3 -3 -4 -4 -5 -5 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Source: Haver Analytics, Goldman Sachs Global Investment Research Second, any decline in the household saving rate would support consumer spending, as happened in the US when real income plunged in early 2022. Exhibit 15 points to room in Europe for saving rates to fall and for consumer credit growth to pick up (although likely by less than in the US because European lower-income households have relatively limited excess savings). Third, while the bulk of reopening gains are behind us, Europe is still benefiting somewhat from a rebound in the service sector. Exhibit 15: Room in Europe for the Saving Rate to Fall and Consumer Credit to Rise Percentage Change in the Household Saving Rate Percentage December 2019=100 Consumer Credit December 2019=100 points Since 2019Q4 points 110 110 25 25 US: Revolving Consumer Credit US UK: Credit Card Lending 20 UK 20 105 Euro Area: Consumer Credit Up to 5 Years 105 Euro Area 15 15 100 100 10 10 95 95 5 5 90 90 0 0 85 85 -5 -5 80 80 -10 -10 75 75 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022 Source: Haver Analytics, Goldman Sachs Global Investment Research While near-term risks of a deep recession have receded somewhat and our commodity strategists now look for a more limited rise in European gas prices next summer, we dont expect GDP to rebound sharply in Europe once it exits a mild recession. The main reason is that energy prices will likely stay high until sufficient new energy supply and/or 16 November 2022 13