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Significance
The economy shrank by 0.1% quarter-on-quarter in April-June; further shrinking in the third quarter would mean a technical recession. Since growth is not likely to pick up much in the next two to three quarters, the economic outlook for Germany is gloomy, with potentially significant political consequences.
Impacts
Germany’s hard-line stance against ambitious euro-area reform is likely to become more entrenched.
The implications of a German slowdown for the EU-26 will increase the chances of the ECB using unconventional policy to add stimulus.
A recession is likely to have negative effects on Germany’s defence spending, despite US pressure on Berlin to contribute more towards NATO.
Keywords:
Germany,
EUR,
EU,
China,
United States,
economy,
industry,
politics,
fiscal,
foreign trade,
government,
growth,
automobile,
banking,
consumer,
defence,
election,
investment,
party,
private sector,
public sector,
regional,
policy,
manufacturing,
opposition,
Automobiles,
Banks
© Oxford Analytica 2020. All rights reserved. This content contains general information about geopolitical, macroeconomic and social developments or (where stated) other matters. It does not contain advice or recommendations that may be relied on. Where links to external websites are provided, this does not indicate that Oxford Analytica or Emerald agree with, endorse or have checked for accuracy the contents of said sites.
2019
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