FX.co ★ Germany Narrowly Skirts Recession In Q3

In the third quarter, the German economy experienced slight growth following a previous decline, thereby steering clear of a technical recession, as per official data released on Friday.

Revised figures from Destatis indicated that the gross domestic product (GDP) rose by 0.1 percent quarter-on-quarter during this period, a slight downward revision from the 0.2 percent growth initially reported on October 30.

Previously, in the second quarter, GDP fell by 0.3 percent. Although the economy averted a technical recession thanks to the slight upturn in the third quarter, the growth rate remained minimal.

Year-on-year, calendar-adjusted GDP saw a 0.3 percent decline in the third quarter, exceeding the preliminary estimate of a 0.2 percent drop. GDP had decreased by 0.3 percent in the second quarter and 0.1 percent in the first quarter.

Price-adjusted GDP recorded a 0.1 percent annual increase in the third quarter, revised from the earlier estimate of 0.2 percent.

From the expenditure perspective, the quarterly GDP growth was primarily driven by consumer spending, while net foreign trade and investment were contributing negatively.

Household spending increased by 0.3 percent as consumers allocated more towards non-durable goods. Government final consumption expenditure grew by 0.4 percent, leading to a 0.3 percent rise in overall final consumption expenditure.

Conversely, gross fixed capital formation fell by 0.1 percent, with a 0.2 percent decrease in machinery and equipment and a 0.3 percent decline in construction.

Concerning foreign trade, it was observed that exports of goods and services diminished by 1.9 percent. Conversely, imports saw a modest increase of 0.2 percent.

Despite avoiding a recession in the summer, the German economy faces the potential of a recession in the winter, warned ING economist Carsten Brzeski.

Looking beyond winter, the prospects for economic growth will largely depend on the new government's capacity to bolster the domestic economy amid the threat of a trade war and increasingly aggressive industrial policies in the United States, the economist remarked.