Germany narrowly avoids recession despite trade war hit

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Germany has meticulously avoided a recession, according to new official data.

The country’s economy lengthened by 0.1% in the third quarter of the year after contracting in the previous three months.

A economic downturn is often defined as two consecutive quarters of declining economic activity.

Germany’s intensity as an exporter of manufactured goods has left it exposed to recent conflict in international trade.

The growth figure was the right side of zero but it is still plumb weak. Putting together the new figures and the previous quarter’s performance, the conservation did shrink slightly over the six month period.

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Trade is a central element in this story.

The value of tot up German exports – including services – is about 47% of the country’s uncut economy, its gross domestic product or GDP.

There is a lot of imported content in those exports. So an another way of looking at it is the value added in Germany of the goods it sells abroad. That is forth a third of GDP.

Manufacturing challenges

For such a big economy, those figures are bare large.

They reflect the strength of the country’s manufacturing industry. Built goods are more extensively traded than services.

The figures measly Germany has been very vulnerable to adverse winds in global trade.

The tensions that have followed the more assertive approach of US President Donald Trump’s administering are a case in point.

Germany has been affected through several sluices.

The conflict between the US and China has affected the Chinese economy which is an consequential buyer of German vehicles and industrial equipment.

There have been US rates on imports of steel and aluminium.

And more recently US tariffs in retaliation past subsidies to the European aircraft maker Airbus have targeted the four living soul countries responsible for most of the financial support – Germany, along with the UK, France and Spain.

No knock someone for a loop then that German economic growth has been slower this year.

The freshest figures show that exports did increase in the third quarter of the 2019. But mark-downs abroad have been hit and the risks to exporters remain significant.

Car earnestness struggling

It is not all down to trade.

Germany’s motor industry has had a hard dead for now with emissions issues. Volkswagen was the central player in the scandal for emissions test cheating.

And now there are further issues with the trouble to adapt to new European Union rules on greenhouse gas emissions and the related defiance of making the transition to electric powered vehicles, which requires whopping investment.

There is also a widely held view in Germany that the boondocks needs a major investment programme to improve its infrastructure, in areas such as railing, bridges and broadband.

All that said it bears emphasising that Germany has one of the scantest unemployment rates on the planet at 3.1%. It has also seen the number of people with roles continue to grow this year, although more slowly than in the current past.

It is also the case that in terms of the recovery from the fiscal crisis Germany is a relatively strong performer.

Among the G7 group of peerless developed economies, Germany comes out best compared with pre-crisis levels in appellations of GDP per capita, a somewhat rough and ready indicator of average living precepts.

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