Germany Narrowly Avoids Recession In 2019: An Economic Cautionary Tale?

Brexit worries, US retail sales slide, like a bad Valentine’s Day date, the February 14, 2019 stock market rally has fizzled out after a perky start and Germany narrowly avoids recession, is this 2019’s economic cautionary tale?

By: Ringo Bones

The German economy narrowly avoiding recession in 2019 should serve as 2019’s biggest economic cautionary tale because the German economic slowdown is largely caused by President Trump’s ill advised imposition of steep tariffs on German cars exported to the US. Anti globalist Euro-skeptics may cry out that Germany is the only main beneficiary of the European single-currency since its implementation, but Germany catching the economic equivalent of the common cold could have wider implications on the global economy this year.

Germany’s economy just about avoided falling into recession during the final three months of 2018. Europe’s largest economy registered zero growth during the fourth-quarter of 2018, the country’s Federal Statistics Office said. This 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 October to December 2018 followed a 0.2-percent contraction in the previous quarter. Reasons for slower growth last year include a slowdown in global economy and a weaker car sector, with German consumers less willing to buy new cars amid confusion over new emission standards.

Despite of a worrying situation, the jobs situation in Germany is particularly pretty good. Unemployment is among the lowest in the world at just above 3-percent. Sadly, a strong economic rebound for Germany for the whole of 2019 is very unlikely citing this year’s early results.