• Frenazo.The countries are preparing for the coming recession ... less Spain

The German central bank ( Bundesbank ) argues that it is not necessary to start fiscal stimuli at this time, despite the impending recession that the German Government will have to face. The entity thus corrects the head of Finance, Olaf Scholz , who raised this week the possibility of launching a fiscal stimulus plan to revive the economy. The announcement has again cooled the markets, which had welcomed the measure optimistically. After knowing the position of the Bundesbank, both the Dax and the Euro Stoxx 50 lost the benefits they had accumulated during the day.

The main economy of the Eurozone has stopped growing, after the activity fell 0.1% in the second quarter of the year, and borders the technical recession for the first time in a decade. The deterioration of the German economy was made patent again in the new data known on Thursday, according to which the German manufacturing industry continues its contraction and orders continue to fall.

In June, Germany's industrial production suffered its biggest decline since 2009, contracting 5.2% in its interannual rate. Hence, many producers see with good the measures that the Government could be preparing.

However, despite having favorable conditions of indebtedness (with the bund , the 10-year German bond, which has become negative), the Government has so far been reluctant to abandon its iron zero debt policy . However, this week it has become clear that Germany would be willing to take action in case of a deep recession.

German finance minister Olaf Scholz acknowledged Wednesday that "external risks have increased significantly and are fueling business uncertainty." The senior German official added that "although the labor market situation is favorable, employment growth is slowing."

The trade war between the United States and China and the uncertainty about the Brexit process are weakening the health of the European locomotive. However, for the experts of the Bundesbank the time has not come to take action. The German economy, in his opinion, is in a state of stagnation that could be corrected without alarms having to be activated. This is despite the fact that in its last report the entity claimed that the economy as a whole could contract slightly again this summer due to the continued decline in the industry.

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  • Germany
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