Germany is on the verge of recession. This is supported by the Bundesbank in the August monthly report which, after the minus sign recorded in the second quarter, raises the alarm on the third quarter's GDP.
The German central bank underlines that although the 0,1% drop shown by Gross Domestic Product in April-June (+0,4% in the first quarter) is also due to extraordinary factors, so far there have been no signs of improvement. “The German economy remains weak even in the summer of 2019″, writes the central institute, which means that: “even in the current quarter, economic activity may ease slightly”. Not only that: "the end of the slowdown is not yet in sight", specifies the Bundesbank in its report.
Two consecutive minus signs in economics equal one technical recession. The "clear contraction" of industrial production, weighed down by international trade tensions, could contribute to the slowdown of the largest economy in the Eurozone, the Bundesbank points out. In detail, the decline in construction output due to seasonal adjustment, the decline in exports to the UK (following early purchases in the first quarter) and stagnant auto demand could also weigh. The institute, citing weak momentum in the industry as the reason for the lingering weakness, said that it is not clear whether domestic demand could suffer a slowdown as well.
The alarm raised by the Bundesbank immediately brought to the fore the controversy relating to the need for Berlin to launch an extraordinary plan to avoid the crisis. According to Bloomberg, who quotes Finance Minister Olaf Scholz, it could be around the corner a possible 55 billion euro stimulus plan to revive the economy. This is also confirmed by the Sun 24 Hours according to which Chancellor Angela Merkel would be willing to set aside a balanced budget to support public investment. This supports the idea of those who think that with the new president of the EU Commission, Ursula Von Der Leyen, Europe will de facto abandon the line of austerity, with Germany leading the way.
For the moment the Frankfurt Stock Exchange it decided to ignore the risk of recession feared by the European central bank, aligning itself with the sharp increases achieved by the other stock exchanges and concentrating above all on the hypothesis of the arrival of a rain of billions to revive the economy. At 16.00 the Dax 30 gains 1,57%.
