Home » Currency Note » Currency Note » Currency Note EUR » EUR: Germany narrowly avoids recession

The eurozone’s largest economy is on the precipice of recession, as Germany’s economy failed to grow in the fourth quarter of 2018. The latest GDP growth rate figures were expected to climb to 0.1% from -0.2% the previous quarter, but the figure came in at around 0%. A technical recession is two consecutive periods of decline, so Germany has just avoided one, although that will provide little comfort at the moment.

The reading means that the German economy has failed to post any growth since June 2018 and in the third quarter, the negative reading was the first time GDP shrank since 2015. Still, some economists believe that the economy will pick up in 2019 and rebound in the first half of this year. There are four main reasons behind the disappointing showing: the global slowdown, Brexit, car troubles and the weather.

GDP growth across the eurozone as a whole was more stable and held steady at 0.2% to fall in line with expectations. The number of employed people across Europe increased by 0.3% in the fourth quarter following a 0.2% gain in the previous quarter and above expectations of 0.2%.

Today we will see the eurozone’s balance of trade figures for December. Last time around, there was a surplus of €19 billion, so it will be interesting to see whether this expands or contracts this time. Regardless, these are worrying times for the eurozone at present and the GDP readings for the first quarter of 2019 will be much anticipated.

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