Article: https://www.bbc.com/news/business-47236841
Germany's economy narrowly avoided a recession in 2018. During the third quarter, their economy experienced a 0.2% contraction, followed by a 0% growth in the fourth quarter. Per the definition of a recession, at least two consecutive quarters of contraction, they missed the mark.
This does not paint a good picture for their future. Their slow, or lack of growth last year could be explained by a slowdown in the global economy. Moreover, the car industry has had a significant impact as new regulations are punishing firms and discouraging consumers from buying.
However, German unemployment is very low (around 3%), thus consumers may begin to spend more as they see economic surveys improve with time. An increase in spending could help Germany's production and boost growth.
2 comments:
Duncan,
Interesting article, gotta love BBC's optimism. I was surprised, however, in the analysis portion at the end that Andrew Walker didn't connect the possible recession to the weakening of the EU. The rise of illiberal democracies in Eastern Europe, economic turmoil in Greece and Italy, and Brexit could all have impressive effects on Germany's economy. For example, a no deal Brexit in the next two months could decrease German car sales in the isles, perhaps pushing them over the edge into a minor recession. Additionally, the German government has limited tools at its disposal to help the auto industry thanks to regulations from the WTO and EU. Possible protectionist measures tend to only be permissible in developing states, not the EU's largest economy.
Interesting article, Duncan. I agree with Ben is the fact that I was very surprised by the analysis portion. It will be interesting in the coming months to see what the EU will do regarding Germany.
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