Germany’s Economy Shrinks in April-June Period of 2019

Germany’s GDP has decreased by 0.1% compared to the first quarter according to the Federal Statistics Office caused by a decline in exports amid concerns of a global slowdown.

According to Andrew Kenningham, the chief Europe economist of Capital Economics, the third quarter might be bad as the “manufacturing business surveys for July were all gloomy.”

Household and government expenditure have increased in Germany alongisde investment outside the construction sector.

Germany is not in a recession but could avoid one by taking the right measures,” said Economy minister Peter Altmaier.

According to Economics correspondent Andrew Walker, China is at the center of the trade storms and is an important export market for Germany. Trade has held Germany’s economy back but consumer spending and investment in Germany both rose.

Business confidence has been low in Germany so recession is a certain possibility but Germany can easily avoid it. Business confidence has decreased because of the US-China trade war and Brexit which has affected global economic confidence.

The IMF (International Monetary Fund) cut its growth forecasts for the global economy due to US-China tariffs, US car tariffs and Brexit – especially with no deal.

The European Central Bank has hinted it could decrease interest rates to tackle the slowdown in the economy. They have also forecasted rate current or lower levels until mid-2020 due to a weak manufacturing sector and uncertainty over Brexit.