Germany growth rate is at risk of a slowdown for the second quarter in succession.
Germany, which is the largest economy in Europe, is having a lackluster growth in its third quarter.
In the quarter ended June, GDP growth contracted by 0.1 percent, when compared to the first quarter. The third quarter could continue with a slight fall, says Bundesbank on Monday.
The German economy which is the industrial powerhouse of Europe depends on its exports as its chief revenue. The country has been badly hit by the trade war that is raging between China and the U.S. As Germany exports chiefly to the U.S. and China, its exports have fallen drastically.
Auto sale exports have fallen with the global slowdown. Even huge companies like Siemens, Volkswagen, and BASF are finding a downturn. The Brexit issue is also a threatening factor that may drag the economy further. Long-term bonds are paying negative interest rates in Germany.
The central bank of Germany has said that there is a continuous downturn in the German industries, which is causing a lag in its GDP. Industrial output has come down almost 5 percent year-on-year basis in the last quarter. This quarter, a further fall in industrial production is expected.
When there is a continuous negative growth for two consecutive quarters, it is termed as a recession. Data hints at a recession in Germany, as this June-to-September quarter may also show a decline, with a drop in industrial orders and production.
The ECB will be meeting in September, and there may an additional cut in interest rates, though rates are already at historically low levels.
There is a global slowdown that has hurt many other countries too. Mexico just averted a recession and its country continues to remain weak. Italy has a political crisis along with a slowing economy. The second quarter in the United Kingdom has also seen a decline.
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