Technical recession knocking at the door

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QIII-2019 QUARTERLY REPORT GERMANY

Technical recession knocking at the door Global trade disputes braking growth

The German economy is set to continue losing steam in the further course of the year. Uncertainty in the business sector remains high with the international trade disputes and the exit of the United Kingdom from the EU looming large.

Real economic output this year will only grow a marginal 0.5 percent at most compared to the previous year. In the event of a no-deal Brexit at the end of October, growth could even slide down towards zero.

Germany is increasingly heading for a technical recession. In the second quarter 2019, German gross domestic product decreased 0.1 percent over the previous quarter after price, calendar and seasonal adjustment, following a 0.4 percent increase in the first quarter. Another downturn in the third quarter would bring the German economy into a technical recession.

Sharp drop in manufacturing output weakens growth. Manufacturing output fell for the third consecutive quarter. The 4.9 percent drop registered in the second quarter was its worst performance for ten years.

Foreign trade pulls down overall economic growth for fourth quarter in a row. Exports failed to contribute to growth, dropping 0.8 percent in the second quarter year on year while imports increased 1.8 percent.


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