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The German economy barely avoids the technical recession



Germany barely avoided a technical recession after recent figures showed that the country's economy grew by 0.1% in the third quarter.

German GDP (gross domestic product) was above analysts' expected decline of -0.1%. Every year, the economy grew by 0.5% from July to September, reported the Federal Statistical Office. Second-quarter growth was revised from -0.1% to -0.2%, and two consecutive negative growth periods represented an official recession.

"No recession, but definitely a very weak economy," said Claus Vistesen, chief Euro The Zone Economist of Pantheon Macroeconomics said in a Research Note: "In a sense, this is the & # 39; worst thing & # 39; Both worlds for the markets Today's data confirm that the German economy is now stalling, but the headlines are probably not bad enough to trigger an immediate and aggressive tax reaction from Berlin. "

While the numbers show that the country avoided a technical recession in the third quarter, economic development in the region is still fragile.

Daniela Schwarzer, director of the German Council for Foreign Relations, said in a conversation with CNBC Annette Weisbach on Thursday that there was "only a small difference" between 0.1% and -0.1 % Growth. [1965] 9002] "The truth is that Germany has no robust growth prospects right now," she said, noting that the export-dependent country was affected by a shift in international trade policy.

"The whole question is what the sources for future growth in Germany will be.The challenge of actually structurally changing the German economy is huge: there is a need to invest heavily in education, research and innovation, and Germany needs as well Infrastructure investments. "

Ifo demotion

Last month, Germany's leading economic research institute drastically downgraded its forecasts for the largest European economy. The Ifo Institute's joint economic forecast for the full year 2019, published at the beginning of October, was revised from the GDP rate forecast in the spring of 0.8% to only 0.5%.

These included falling global demand for capital goods, which hit the export-dependent German economy, as well as political uncertainties and structural changes in the automotive industry.

Elliot Smith and Chloe Taylor of CNBC contributed to this report.


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