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Germany Narrowly Avoids Recession

The German economy, which shrank by 0.2% in the third quarter of 2018, posted zero growth in October-December, according to government data.
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The German economy, which shrank by 0.2% in the third quarter of 2018, posted zero growth in October-December, according to government data.

The fourth-quarter result allowed Germany to avoid slipping into recession, which is typically defined as two consecutive quarters of economic contraction. But some analysts predict the country’s fourth-quarter figure will be revised downward when additional data becomes available.

Germany’s slump in the second half of the year dented growth of 0.4% in the first quarter and 0.5% in the second period. Full-year adjusted growth was 1.5%, compared with 2.5% in 2017, the Federal Statistical Office says.

The government blames the downturn in exports and subdued growth in domestic consumer spending. Business investment in the country also has slowed. The threat of U.S. tariffs on imported German cars, coupled with fourth-quarter sales disruptions caused by the auto industry’s switch to tougher WLTP emission testing, also contributed.

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