News ID: 261880
Published: 0941 GMT November 22, 2019

Consumption, exports helped lift German economy back to growth

Consumption, exports helped lift German economy back to growth

Consumption and exports helped the German economy stay above water in the third quarter, when it unexpectedly eked out a modest expansion to avoid a recession.

Government and household expenditure accelerated, while exports rebounded after a steep decline, according to figures published Friday, Bloomberg reported.

That was enough to offset a 2.6 percent drop in machinery and equipment investment — the biggest in more than six years — and help the economy register 0.1 percent growth.

The weakness of investment bears out warnings that uncertainty related to global trade tensions has put executives on edge and made companies reluctant to spend. There’s additional pressure on Germany from a slowdown in the car market, which is a huge part of the country’s manufacturing industry.

After a 0.2 percent contraction in second quarter, Europe’s largest economy is barely growing and on track for a full-year expansion of just 0.5 percent. That would be less than half the euro-area average and mark the worst reading since 2013.

Germany’s pace in the third quarter was the same as Italy’s and lagged behind France and Spain. Average growth in the 19-country euro region was 0.2 percent.

However, there have been some positive signs recently, with German business sentiment stabilizing after months of declines. Purchasing Managers’ Indexes due on Friday are forecast to show another modest improvement in measures for both manufacturing and services.

More broadly, global investor optimism has picked up and the risk of a recession has been fading. Much depends on the unfolding of US-China trade talks, where progress appears to change on an almost daily basis.



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