German Central Bank Warns Recession Risks Rising

Germany risks coming dangerously close to recession, the central bank said on Monday in a forecast that predicted little or no economic growth in the second half of the year.

In the Bundesbank’s gloomy assessment, the euro zone’s biggest economy will stay weak, compounding the problems of the 18-country bloc, where the economy is already slowing to a virtual halt.

In its monthly bulletin, the Bundesbank predicted little improvement to Germany’s recent weak performance, cautioning that the year would also end on a ‘modest’ note.

 
In the three months from April to June this year, Germany’s economic output shrank by 0.2 percent. Contracting in the third quarter would put the economy in recession.

“The total economic result should be on the level of the second quarter or even slightly higher,” the Bundesbank said of the third quarter. “Given the weak orders and the downbeat mood among companies, the outlook for the final quarter of the year is similarly modest.”

The downbeat performance of an economy once considered the region’s last bastion of growth echoed the region’s second and third largest economies, France and Italy. The former stagnated and the latter fell back into recession over the same period.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza