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Falling industrial production: Bundesbank sees continuing economic downturn

2019-08-19T14:52:57.588Z

TIME ONLINE | News, backgrounds and debates


Frankfurt / Main (dpa) - After the weak second quarter, the Bundesbank sees little signs of a recovery of the German economy in the summer.

The economy is expected to remain buoyant even in the summer. "Overall economic performance could decline again slightly," it said in the monthly report of the central bank.

According to initial data from the Federal Statistical Office, gross domestic product shrank by 0.1 percent in the period from April to June compared with the first quarter. Above all, foreign trade left skid marks.

Central to the weakness of Europe's largest economy, according to the Federal Reserve, is the "continued downturn in industry". Industrial production is likely to shrink in the current quarter due to lower orders. "The more domestic sectors have so far largely avoided this downward spiral and are supporting the economy," the experts wrote.

The boom in the German construction industry is expected to continue. Also, the income prospects of private households are still favorable. This supports the consumer's desire to buy. However, first signs of the economic downturn are now also recognizable on the job market. Employment was weaker in the second quarter than in the preceding quarters. "From today's perspective, it is unclear whether exports and thus industry will catch up before the domestic economy is affected to a greater extent," the experts wrote.

The slowdown in the global economy, the uncertainties over the trade conflict between the US and China, and the imponderables of Brexit put pressure on German industry. Added to this is the structural change in the auto industry due to electric mobility.

If economic output falls for two quarters in a row, economists speak of a "technical recession". However, this is only a very mild recession. The situation would be different if the economic output for the whole year shrinks compared to the previous year. However, this is not expected.

Source: zeit

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