Exports and extra spending help Germany avoid recession
Rising exports, consumer consumption and an increase in government spending helped Germany avoid recession in the third quarter of the year, a breakdown of the statistics showed today.
German GDP grew by 0.1 per cent quarter on quarter in the three months to September, data showed last week, meaning it dodged a technical recession after the economy shrank by 0.1 per cent in the second quarter.
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The German economy has been blown off course in 2019 as the US-China trade war, a global slowdown – particularly in China – and domestic production issues have hurt growth.
Exports picked back up in the third quarter, however, rising one per cent quarter on quarter, the German Statistics body said today.
Government expenditure grew by 0.8 per cent in the same period, while household consumption grew by 0.4 per cent.
Many prominent institutions and groups – such as the IMF and German industry bodies – have called on the German government to relax their stricti spending rules and stimulate the economy.
Yesterday, the OECD told governments around the world that they needed to stop relying on central banks and kickstart their economies themselves. German Chancellor Angela Merkel has been reluctant to spend extra, however.
Andrew Kenningham, chief Europe economist at consultancy Capital Economics, was last week pessimistic about the German economy’s chances in the final quarter.
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“We think the economy will probably contract slightly next year – so a recession may have been postponed rather than avoided altogether,” he said.
“With policymakers unlikely to loosen fiscal policy significantly, we think a mild recession is more likely than not in the coming year.”