Germany narrowly escapes recession in third quarter

The German economy avoided falling into recession in the third quarter by registering a meagre 0.1% growth, the Federal Statistical Office announced on Thursday (14 November).

A rise in private and state consumer spending, and the pickup in the external demand stopped the largest European economy from slipping into a technical recession, following a 0.2% fall in the second quarter, greater than previously reported.

The trade war and geopolitical tensions were expected to weigh on the German economy, and analysts forecast a 0.1% fall in the third quarter.

“Recession or not, the German economy has fallen into a de facto stagnation, with quarterly GDP growth averaging a meagre 0.1% quarter on quarter since the third quarter of last year,” said Carsten Brzeski, chief economist at ING Germany.

“After 10 years of almost unstoppable economic growth, a shorter period of stagnation is not necessarily a big crisis. This also explains the resistance or at least hesitation of the German government to engage in significant short-term fiscal stimulus,” he added.

The latest German figures came as Eurostat confirmed on Thursday that the eurozone economy grew by 0.2% in the third quarter, as initially announced in late October.

Although the German and eurozone economies beat analyst expectations, the European Commission has cut its growth forecast for this year and next, as it does not expect that the output will recover within the next two years.

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