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Germany avoids recession as GDP grew moderately in Q3
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A sharp rise in private consumption more than compensated for stubborn weakness in investment to help the German economy post modest growth in the third quarter and avoid a technical recession, data showed yesterday.
The Federal Statistics Office confirmed an earlier flash estimate showing a 0.1 percent rise in seasonally adjusted gross domestic product.
Private consumption rose 0.7 percent quarter on quarter, the biggest increase in three years, and public investment rose 0.6 percent. Overall consumption contributed 0.5 percentage points to growth, while trade provided modest support.
On the downside, investment in equipment shed 2.3 percent, while gross capital and construction investment also fell. Overall, investment subtracted 0.7 percentage points from GDP growth in the quarter.
But in a positive sign for the fourth quarter, inventories were a major drag on growth, suggesting a rebound in the final months of the year.
“We are not in a recession,” Finance Minister Wolfgang Schaeuble told parliament after the data was released.
“We don’t have quite such good economic growth as we did before but we are performing close to our economic capacity. We can’t allow thoughtless chitchat about a ‘crisis’ to encourage one.”
He defended Chancellor Angela Merkel’s “grand coalition” government against accusations it is not investing heavily enough in infrastructure, spending that critics say is vital to help spur growth in Europe.
After the German economy contracted by 0.1 percent in the second quarter, some economists had feared it would sink into a technical recession with another drop in the third, weighed down by weakness in key eurozone trading partners such as France, a slowdown in China and uncertainty from the Ukraine crisis.
But on Monday, a closely watched measure of business sentiment from the Munich-based Ifo think tank rebounded, helped by a drop in the euro to two-year lows against the dollar and by a fall in oil prices.
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