Germany is on the verge of recession after its economy stagnated in the fourth quarter of 2019, according to preliminary data.
Europe’s biggest economy, and the driving force behind the eurozone, has seen its powerful manufacturing sector languishing in recession, its exports weakening and its world-leading car sector failing to keep up with the shift to electric vehicles.
Add to that cocktail of woes falls in domestic and state spending and the outlook is far from rosy. Experts and analysts are predicting the German economy will teeter on the brink of recession during the first half of this year, but may just avoid falling over the edge.
That will offer a glimmer of hope to the EU27 as they look to settle the union’s economy following the UK’s departure. The German stagnation compounded recessions in Italy and France which, combined, saw the eurozone grow by just 0.1 per cent in the last quarter.
A touch of optimism comes from German economic growth for the third quarter actually being revised up from 0.1 per cent to 0.2 per cent. Investments in the construction sector also grew in the fourth quarter, said the German Federal Statistics Office.
Even though the overall prognosis is poor, the government is resisting calls for a fiscal stimulus to kick-start a recovery. It may yet heed such demands if the slowdown continues.
Overall, German GDP grew by 0.6 per cent in 2019 but it was a bumpy year. It started with a 0.5 per cent growth followed by a decline of 0.2 per cent in the second quarter. A slight recovery in the third was followed by this latest news of zero.