Berlin (AFP)
Has Germany entered recession? Expected Thursday morning, the growth figures of the third quarter should show the extent of the slowdown in the first European economy, feeding the same time the debate on its budgetary orthodoxy.
Following a 0.1% drop in gross domestic product in the second quarter, GDP could have declined again by 0.1% between July and September, marking the country's first "technical recession" in nine years, according to economists polled by the financial services provider Factset.
Although Germany has already narrowly escaped the end of 2018 two consecutive quarters of decline in production, there is unanimous agreement: the industry, the traditional engine of German growth, has become its ball for more than a year .
In September again, industrial production disappointed by a 0.6% drop in a month, affected by the Sino-US trade dispute, the endless Brexit soap opera and Donald Trump's threats against imports of European cars.
The question now is whether domestic consumption, driven by the resilience of the labor market, will continue to offset the sluggishness of exports and investments.
The government, which is banking on a modest 0.5% growth for 2019, lowered its forecast for 2020 in October, and expects only 1% increase in GDP against 1.5% in its previous forecasts in spring .
- Calls for recovery -
Fears of recession revive in Germany the debate on the "Schwarze Null", the rule of a federal budget at least at equilibrium that governments have scrupulously observed since 2014.
Pure political commitment, the Schwarze Null reinforces the constitutional rule of "Schuldenbremse" ("brake debt"), which allows a deficit of up to 0.35% of GDP, and even beyond in case of exceptional circumstances.
Last week, the Committee of Sages, a group of five economists charged with advising the government of Angela Merkel, called for easing the budget lock "in the event of a more pronounced slowdown" in the activity, on the grounds that could hinder a recovery.
The German industry lobby (BDI) has jumped at the opportunity to call Berlin to "increase public investment", a claim that has been made for years by a large part of the business community, appalled by the state of affairs. digital or rail infrastructure and training needs.
Berlin's partners and international organizations also urge Germany to spend more, both to boost its economy, stimulate its neighbors and more broadly prepare for the future of this aging country.
- Unyielding Merkel -
In early November, Emmanuel Macron called on Germany to "revive" its fiscal policy, while the new President of the ECB, Christine Lagarde, lamented on October 30 that countries "chronically surplus budget" have not "makes the necessary efforts".
But Angela Merkel has firmly closed the debate. "You say clearly - at least I understand it too - that it is important to have a balanced budget and a lot of investment," she told the Sages.
The hitch that the Chancellor forms with his Social Democrat Minister of Finance Olaf Scholz, who has been touting for months his "very ambitious" investment policy, could nonetheless be called into question when the SPD designate its new leadership at the beginning of December, deciding at the same time to stay or not in the government.
Still, even if Berlin inflected his policy, nothing says that the country can quickly mobilize large sums. In September, a study by the bank Berenberg evoked the "long procedures", the "understaffing of local governments" and the "protracted legal challenges of projects", as many practical obstacles to investment.
© 2019 AFP