Rolling coverage of the latest economic and financial news, including German growth figures
- Breaking: Germany grew by 0.1% in the last quarter
- Economists expected another contraction
- Q2 GDP revised down to -0.2%
Carsten Brzeski, European economist at ING, says Germany’s economy is effectively stagnating — despite dodging recession this morning.
He points out that German manufacturers, once a powerhouse of the EU, are really struggling:
Recession or not, the German economy has fallen into a de facto stagnation, with quarterly GDP growth averaging a meagre 0.1% QoQ since the third quarter of last year.
In fact, the German economy can still be divided into two worlds: the depressive world and the happy-go-lucky one. In the depressive world, there are very few signs of an imminent bottoming or recovery of the manufacturing sector since the summer of 2018. The sector is facing and will continue to face cyclical challenges, as ongoing trade conflicts, Brexit uncertainty and slower Chinese growth, along with structural challenges, disrupt the automotive industry. In the happy-go-lucky world, private consumption remains solid on the back of low inflation, low interest rates and a still-strong labour market. The construction sector keeps on booming and the government is also inserting some fiscal stimulus.
Looking into 2020, it looks as if either the cyclical factors weighing on German industry will dissipate somewhat, with the entire economy rebounding, or the domestic part of the economy will also slow down. Either way, don’t forget that the structural challenges will not quickly and easily disappear, keeping a clear cap on any German rebound in 2020.
Germany: Did anyone say ‘recession’? | Snap | ING Think – Strong private consumption and exports helped the German economy to avoid recession in the third quarter https://t.co/CCx32GU68C
Economists are pleased to see that Europe’s largest economy has dodged recession.
However, Fred Dukrozet of Swiss bank Pictet points out that it was pretty close — Germany actually only grew by 0.08% in the last three months.
Keine Rezession! German GDP rose 0.08% QoQ in Q3, following a downwardly-revised -0.24% in Q2. @destatis_news notes that consumptions was the main contributor to growth, exports rose, imports flat, but capex excluding construction contracted. pic.twitter.com/pJKi4zB1nk