German economy narrowly avoids recession

VW production line Image copyright Getty Images

Germany’s economy just about avoided falling into recession during the final three months of last year.

Europe’s largest economy registered zero growth during the fourth quarter of 2018, the country’s Federal Statistics Office said.

That means it avoided two consecutive quarters of contraction, which is the usual definition of a recession.

A weak trade performance dragged on the economy, and consumer spending remained subdued.

The zero growth recorded in the October-to-December period followed a 0.2% contraction in the previous quarter.

Reasons for slower growth last year include a slowdown in the global economy and a weaker car sector, with German consumers less willing to buy new cars amid confusion over new emission standards.

In addition, low water levels, particularly in the Rhine, affected growth by holding back movement of some goods.

However, there are hopes that growth will pick up this year.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said he was “optimistic” that the first quarter of this year would be better.

“The January [economic] surveys were poor… but net exports won’t be in free fall forever, and consumers’ spending also ought to pick up.”

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