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Germany narrowly avoids recession after economy stagnates in late 2018

Concerns linked to Brexit and global trade disputes weighed on the EU's largest economy last year

Caitlin Morrison
Thursday 14 February 2019 09:50 GMT
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Germany just about avoided falling into recession in 2018, with growth at a standstill in the final quarter of the year.

Europe’s biggest economy shrank by 0.2 per cent in the third quarter (a recession is defined as two or more quarters of contraction).

Analysts had been expecting growth of 0.1 per cent in the final three months of last year.

The data shows that the German economy grew at its weakest rate in five years in 2018, and is forecast to slow again this year.

Experts pointed to Brexit uncertainty and fears surrounding global trade disputes as the reason behind the sluggish economy, with business confidence dropping for the fifth month in a row in January.

Those concerns are not expected to lift in the near future. DekaBank economist Andreas Scheuerle said: “Germany got away with a black eye [in the fourth quarter].”

He added: “But the first quarter is not looking like it is going to be easy, either, as political uncertainties are weighing heavily on corporate confidence.”

Statista

Jasper Lawler, head of research at London Capital Group, warned of the wider consequences if the German economy deteriorates further.

“Were Europe’s powerhouse to fall into recession, it could renew the kind of global growth fears that saw markets tumble over in December,” he said.

Additional reporting by newswires

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