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Germany avoids recession with modest return to growth

By Elena Berton

The leading eurozone economy’s surprise growth of 0.1 per cent may ease pressure on Angela Merkel’s government to boost spending

The German economy narrowly avoided recession in the third quarter with a surprise growth of 0.1 per cent, easing pressure on Angela Merkel’s government to boost spending.

Economists had predicted that German gross domestic product would fall again by around 0.1 per cent in the third quarter, after the EU’s largest economy had contracted in the previous three months due to shrinking exports.

The data showed that positive contributions in the third quarter of 2019 mainly came from private consumption, Germany’s federal statistics office said.

Even though Germany managed to escape a technical recession in the last three months, its modest growth underlines how the leading EU’s economy has suddenly stalled.

Germany’s export-reliant economy has been hit by the US-China trade war, uncertainty over Brexit as well as new emissions rules and the shift to electric vehicles, which have upended the auto sector.

So far, the German government has resisted calls to use its significant budget surplus on economic stimulus.

German Economy Minister Peter Altmaier told journalists: “We do not have a technical recession, but the growth numbers are still too weak.”

The latest quarterly figures compare with 0.2 per cent growth across the eurozone in the same period, when Spain expanded by 0.4 per cent, France by 0.3 per cent and Italy by 0.1 per cent.

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