Germany has been under the spotlight in recent weeks after it was announced the economy had contracted in the third quarter, following be a string of weak industrial and manufacturing figures pointing to a slowdown in growth. Fears of a downward trend for the financial hub of Europe were further compounded after gloomy figures revealed weaker than expected industrial output figures for the third consecutive month. Economists are now fearing the fall in numbers could indicate a bigger economic woe for Germany, with a recession being defined as gross domestic product (GDP) falling for two consecutive quarters. The Federal Statistics Office will publish preliminary GDP growth data for the fourth quarter and 2018 as a whole on Tuesday next week.
German Economy Minister Peter Altmaier yesterday denied the economy was heading towards recession but confirmed the government is discussing fiscal measures to support growth.
Mr Altmaier told the Handelsblatt newspaper: “Germany is not currently at the beginning of a recession, even if there are unresolved problems in international trade with Brexit and the United States.”
The government will present updated 2019 growth forecast at the end of January, he said.
In October, the government predicted 1.8 percent growth for this year.
Mr Altmaier called for lower corporate taxes to help companies, but he admitted that he had yet to convince Finance Minister Olaf Scholz.
He said: “It makes sense now to set incentives for growth.
“The economy needs a tailwind in order to be stronger in the future, to create jobs and growth.”
The German economy shrunk by 0.2 percent in the third quarter, marking its first contraction since 2015.
Industrial output in Germany fell by 1.9 percent on the month in November, lower than the 0.3 percent increase that had been forecast.
Meanwhile, the manufacturing sector in Germany also nodded to companies changing down a gear with new orders falling at the fastest rate in four years.
Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, tumbled to a 33-month low of 51.5 in December, down from 51.8 in November.
The number is inching closer to the 50.0 level which marks a contraction.
Stefan Schilbe of HSBC described recent downcast economic data from Germany as both “bad and unexpected” as he predicted a recession “now seems likely”.
Mr Schilbe told Business Insider: “The decline was broad-based across sectors, with no bright spots.
“Manufacturing fell by 1.8 percent month-on-month with the consumer goods sector once again being the major drag.
“Today’s data were both bad and unexpected.
“A technical recession in German industry now seems likely.”