Germany on brink of recession as economy shrinks in Q2

Germany’s gross domestic product (GDP) fell by 0.1% compared with the previous quarter, according to the Federal Statistics Office released today.

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It takes Germany’s annual growth rate down to 0.4%. Germany, Europe’s largest economy, narrowly avoided a recession last year. Worryingly, this is the a second contraction in four quarters.

If the German economy declines again in Q3 (July – September), it will have entered a technical recession, which it narrowly avoided in 2019.

The contraction is being blamed on a combination of difficulties in Germany’s automobile industry, the potential of the UK leaving the EU without a trade deal and the US-China trade war.

Melanie Vogelbach at the Association of German Chambers of Industry and Commerce told The Telegraph: “The challenges for the German economy are mainly based on international factors: trade conflicts, sanctions and the scenario of a no-deal Brexit.

“Trade wars are never good and for an economy that relies as much on exports as German industry, that is a very important factor.”

Analysts are, once again, bandying about the phrase “the sick man of Europe” to describe Germany.