German authorities will today release preliminary economic growth estimates for the three months to September. The data is expected to
German authorities will today release preliminary economic growth estimates for the three months to September.
The data is expected to paint a dim picture of Europe’s largest economy—economists expect either a slight contraction by 0.1%, as polls indicate, or a flatline. The former would confirm that Germany has entered recession for the first time since 2013.
Economic woes are largely attributable to the ongoing uncertainty caused by Brexit and trade tensions between China and the US, as well as the EU and the US.
However, economists warn that structural issues are also dragging Germany’s economy down. The country has been slow to adopt new technologies like artificial intelligence, investment is weak and regulatory barriers to starting new businesses are too high. Indeed, economists expect the German economy to grow slowly—if at all—well into 2020.
While bumper German export figures in September have assuaged fears of a larger slowdown, today’s figure is likely to send ripples through the Eurozone. While domestic-focused economies like France can remain somewhat shielded from the effects, Germany’s economic woes will likely spill over into other export-driven economies, mostly in central and eastern Europe. Should Germany enter a recession, the European Central Bank may move forward on further stimulus measures as well.
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