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German economy avoids narrow technical recession



Germany has narrowly avoided a technical recession, after recent figures show that the country's economy grew by 0.1% in the third quarter.

Germany's GDP (gross domestic product) yields above -0.1% contraction expected by analysts. On a year-over-year basis, the economy grew 0.5% from July to September, the Federal Statistics Office reported. Growth in the second quarter was revised from -0.1% to -0.2%, and two subsequent periods of negative growth would have constituted an official recession.

"No recession, but certainly a very weak economy," Claus Vistesen, chief-euro zone economist at Pantheon Macroeconomics, said in a research note.

"In a sense, this is the" worst "of both worlds for markets. Today's data confirms that the German economy has now stopped, but the headlines are probably not gloomy enough to ask for an immediate and aggressive fiscal response from Berlin. "

Meanwhile, German Economy Minister Peter Altmaier said that while the figures show that the country avoided a technical recession in the third quarter, economic development in the region is still fragile.

Speaking to CNBC's Annette Weisbach on Thursday, Daniela Schwarzer, director of the German Foreign Relations Council, noted that there was "only a minor difference" between 0.1% and -0.1% growth. [19659002] "The truth of the matter is that Germany does not have a robust growth prospect at the moment," she said, noting that the export-dependent country was hit by a shift in international trade policy.

The whole question is what will be the sources of future growth for Germany, and the challenge of actually changing the German economy structurally is enormous … There must be a strong investment in education, research and innovation, and Germany also needs infrastructure investment. "

Ifo downgraded

Last month, Germany's leading economic research institute sharply downgraded its projections for Europe's largest economy. Ifo Institute's joint financial forecast for the whole of 2019, published in early October, was revised from 0.8% GDP rate which was estimated in the spring to only 0.5%.

The causes of poor performance, according to the institute, including declining global demand for capital goods, which has hit Germany's export-related economy, along with political uncertainty and structural changes in the automotive industry. [19659002] – CNBC's Elliot Smith and Chloe Taylor contributed to this report.


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