The German economy has defied expectations of recession by growing 0.1 per cent in the third quarter as higher household and government spending offset a sharp downturn in the country’s export-focused manufacturing sector.
The slight growth in the German economy, which was announced on Thursday, could ease the pressure on Angela Merkel’s government to ditch its commitment to budget surpluses and inject more fiscal stimulus.
Germany’s federal statistics office changed its figures for the first and second quarters. It revised down Germany’s second-quarter economic contraction from minus 0.1 per cent to minus 0.2 per cent, while revising up first-quarter growth figures from 0.4 per cent to 0.5 per cent.
By surprising many economists with the slight growth in the third quarter, the German economy has avoided the technical definition of a recession.
Germany’s performance compares with 0.2 per cent growth across the eurozone in the same period, when Spain expanded by 0.4 per cent, France by 0.3 per cent, and even Italy managed 0.1 per cent growth.
The latest quarterly figures for the German economy come after the country enjoyed 2 per cent annual growth on average over the past five years and underlines how the powerhouse of the eurozone economy has suddenly stalled.
“The quarter-on-quarter comparison . . . shows that positive contributions in the third quarter of 2019 mainly came from consumption, according to provisional calculations,” Germany’s federal statistics office said on Thursday.
Germany’s export-focused economy has been hit by the US-China trade war, uncertainty over Brexit and disruption in the car industry caused by new emissions rules and the shift to electric vehicles. Car production was down 9 per cent in the first 10 months of the year.
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