September 13, 2019 / 8:19 AM / 4 days ago

German economy not heading for pronounced recession - ministry

BERLIN (Reuters) - Europe’s largest economy is not facing a bigger downturn or a pronounced recession after contracting slightly in the second quarter but there are no signs of a turnaround yet either, the German Economy Ministry said on Friday.

FILE PHOTO: Aerial view of containers at a loading terminal in the port of Hamburg, Germany August 1, 2018. REUTERS/Fabian Bimmer/File Photo

The German economy contracted by 0.1% quarter-on-quarter in the April-June period and some weak data since then has fueled concerns that the economy could slip into recession in the July-September period.

Economists generally define a technical recession as at least two consecutive quarters of contraction. This week several institutes said the economy would slide into recession in the third quarter.

“The German economy is going through a weak phase,” the ministry said in its monthly report.

“A bigger downturn or even a pronounced recession is not expected at the moment. However, indicators don’t point to an economic turnaround for the better either,” it added.

The German economy has weakened as its export-dependent manufacturing sector languishes in recession, partly due to trade conflicts and uncertainty linked to Britain’s planned departure from the European Union.

The ministry said exports were moving sideways but private and state consumption were providing noticeable support to the economy.

While construction is faring well, the industrial and energy sectors are experiencing a weak patch, the ministry said. It added that a recovery in the industrial sector was not in sight for the time being after it suffered a poor start to the third quarter.

Data published last week showed industrial orders plunging and industrial output dropping, adding to concerns about the economy’s health.

Finance Minister Olaf Scholz told lawmakers on Tuesday that Germany was ready to pump “many, many billions of euros” into its economy to counter any significant slowdown in growth, and said the country must take bold measures to fight climate change before it is too late.

Reporting by Michelle Martin; Editing by Paul Carrel

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