Germany claims it's not set for recession

Germany claims it's not set for recession

Europe's largest economy is not facing a bigger downturn or a pronounced recession after contracting slightly in the second quarter but there are no signs of a turnaround yet either, the German Economy Ministry has said.

The German economy contracted by 0.1% quarter-on-quarter in the second three months of the year and some weak data since then has fuelled concerns that the economy could slip into recession in the current quarter.

Economists generally define a technical recession as at least two consecutive quarters of contraction. This week several institutes said the German economy would slide into recession in the third quarter.

“The German economy is going through a weak phase,” the ministry said in its monthly report.

“A bigger downturn or even a pronounced recession is not expected at the moment. However, indicators don’t point to an economic turnaround for the better either,” it added.

The German economy has weakened as its export-dependent manufacturing sector languishes in recession, partly due to trade conflicts and uncertainty linked to Britain’s planned departure from the EU.

The ministry said exports were moving sideways but private and state consumption were providing noticeable support to the economy.

While construction is faring well, the industrial and energy sectors are experiencing a weak patch, the ministry said. It added that a recovery in the industrial sector was not in sight for the time being after it suffered a poor start to the third quarter.

-Reuters

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