German Economy Escapes Recession In Q3
November 13 2019 - 9:50PM
RTTF2
Germany's economy expanded modestly in the third quarter
supported by consumption and, thus avoided entering a widely
expected technical recession. Gross domestic product grew a
seasonally and calendar adjusted 0.1 percent from the previous
three months, provisional data from the statistical office Destatis
showed on Thursday, defying economists' expectations for a 0.1
percent decline. The contraction in the second quarter was revised
to 0.2 percent from 0.1 percent. Another contraction in the third
quarter would have seen the biggest euro area economy slipping into
a technical recession that is defined as two consecutive quarters
of GDP decline. Such a scenario was widely expected, but even then
there was consensus that any such recession would be mild.
"Recession or not, the German economy has fallen into a de facto
stagnation, with quarterly GDP growth averaging a meagre 0.1
percent QoQ since the third quarter of last year," ING economist
Carsten Brzeski said. "While a growth crisis still looks unlikely,
a longer period of stagnation is still in the cards," the
economist added. On November 6, the German Council of Economic
Experts said in their annual report that "The upswing has come to
an end, but a widespread and deep recession is still unlikely."
The council, which is the independent economic adviser to the
German government, cut the economic growth forecast for this year
to 0.5 percent from 0.8 percent seen in March. The projection for
next year was lowered to 0.9 percent from 1.7 percent.
In the third quarter of 2018, GDP decreased 0.1 percent. The
quarter-on-quarter comparison shows that positive contributions in
the third quarter of 2019 mainly came from consumption, Destatis
said.
In quarterly comparison, both household spending and government
final consumption expenditure increased. Exports rose, while
imports were broadly unchanged. Gross fixed capital formation in
construction grew, while investment in machinery and equipment was
lower. Compared to the same quarter of 2018, GDP grew a
non-seasonally adjusted 1 percent in the third quarter following a
0.1 percent contraction in the previous three months, which was
revised from stagnation. Economists were looking for a 0.8 percent
expansion. On a working-day adjusted basis, GDP grew 0.5 percent
year-on-year after a 0.3 percent increase in the previous quarter,
which was revised from 0.4 percent. Economists had forecast a 0.5
percent gain. In the third quarter, employment grew by 0.8 percent
or by 356,000 persons year-on-year to 45.4 million. Destatis is set
to release detailed results for the third quarter national accounts
on November 22.
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