Recession fears are stalking Germany

Europe's largest economy may be in recession for the first time since the region's debt crisis.A shoc...

Posted: Jan 8, 2019 4:16 PM
Updated: Jan 8, 2019 4:16 PM

Europe's largest economy may be in recession for the first time since the region's debt crisis.

A shock plunge in industrial output in November suggests Germany may have suffered a second consecutive quarter of economic contraction at the end of 2018.

Business, economy and trade

Continents and regions

Economic conditions

Economic decline

Economy and economic indicators

Europe

Germany

Recession

Western Europe

Economic policy

European Union

Eurozone

Government organizations - Intl

Monetary unions

Business and industry sectors

Manufacturing and engineering

Manufacturing industry

Asia

China

East Asia

Economic crisis

Industrial production in Germany plummeted 1.9% compared to the previous month, according to data published Tuesday. That's much worse than the 0.3% uptick economists polled by Reuters had expected.

Carsten Brzeski, ING's chief economist in Germany, said the data showed that the risk of recession had "clearly increased." Oxford Economics downgraded its growth forecast for the fourth quarter to 0% and said recession was now "a reasonably high risk."

Official growth figures for the final three months of 2018 will be published next week. Germany's economy shrunk 0.2% in the third quarter, and another three months of contraction would mean the first recession since 2013.

Data indicate the export powerhouse faced continued pressure in the final month of the year.

A key gauge of business sentiment produced by the Ifo Institute weakened further in December. Manufacturers scaled back production plans as their business expectations turned negative for the first time since May 2016.

"The big picture is that the German economy — and the eurozone more generally — has clearly shifted down a gear," said Jack Allen, senior European economist at Capital Economics.

A recession in Germany would be another major worry for investors who have been unnerved by the prospect of weaker economic growth this year in the United States and China.

In Germany, carmakers such as Volkswagen (VLKAF) have been hurt by weaker sales in China. The sector has also struggled to certify some new models under new EU emissions tests.

New car registrations in Germany slumped 30% over the previous year in September. Conditions have improved somewhat, but registrations were still down 10% in November.

Brzeski said the drop in industrial production means that problems extend beyond the car industry.

"The last significant quarterly surge in industrial production dates back to the fourth quarter of 2017... since then, industrial production has been treading water," he said.

A weaker German economy, combined with slower global growth and fallout from the trade war between China and the United States, is causing problems across Europe.

"Eurozone exports to the US have remained strong, supported by solid US growth, but exports to China have been weaker," said Anna Titareva, an economist at UBS.

The slowdown could create a major headache for the European Central Bank, which completed a huge stimulus program in December and was planning to start raising interest rates later this year.

If growth slows further, it will have to reconsider.

Terre Haute
Clear
67° wxIcon
Hi: 86° Lo: 65°
Feels Like: 67°
Robinson
Clear
66° wxIcon
Hi: 87° Lo: 63°
Feels Like: 66°
Indianapolis
Scattered Clouds
74° wxIcon
Hi: 85° Lo: 67°
Feels Like: 74°
Rockville
Clear
61° wxIcon
Hi: 86° Lo: 64°
Feels Like: 61°
Casey
Clear
70° wxIcon
Hi: 85° Lo: 64°
Feels Like: 70°
Brazil
Clear
67° wxIcon
Hi: 87° Lo: 64°
Feels Like: 67°
Marshall
Clear
67° wxIcon
Hi: 87° Lo: 64°
Feels Like: 67°
Partly cloudy to mostly clear. A few pop-up showers expected
WTHI Planner
WTHI Temps
WTHI Radar

WTHI Events

 

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Confirmed Cases: 201727

Reported Deaths: 7905
CountyConfirmedDeaths
Cook1137884943
Lake13047450
DuPage12592523
Kane10027305
Will9576347
St. Clair4215162
Winnebago3814134
McHenry3308114
Madison285579
Kankakee182969
Rock Island179638
Peoria175837
Champaign172919
Kendall143123
Unassigned1382209
Sangamon134533
DeKalb96031
LaSalle87828
Boone77023
Jackson74320
McLean70315
Macon70223
Tazewell6129
Adams5817
Coles54621
Randolph4957
Williamson4777
Clinton43317
Ogle4215
Whiteside36817
Grundy3535
Union33723
Stephenson3366
Monroe33413
Knox3311
Jefferson31720
Morgan2916
Iroquois27412
Henry2661
Vermilion2572
Bureau2473
Cass24511
Macoupin2093
Franklin2051
Warren1960
Perry1933
Effingham1921
Lee1861
Logan1791
Montgomery1757
Woodford1723
Marion1680
McDonough14715
Christian1444
Jersey1412
Jo Daviess1361
Livingston1343
Saline1342
Douglas1333
Pulaski1011
Moultrie1000
Shelby922
Clark882
Mercer774
White750
Fayette733
Hancock721
Johnson710
Washington691
Bond683
Carroll684
Wayne672
Greene660
Piatt650
Jasper617
Cumberland603
Mason580
Menard580
Ford522
Lawrence520
Gallatin512
Wabash440
Massac430
Alexander370
Fulton370
De Witt340
Marshall330
Clay310
Crawford310
Hamilton310
Edgar300
Pike300
Scott280
Edwards240
Richland240
Schuyler190
Hardin180
Brown150
Henderson150
Putnam130
Calhoun120
Pope110
Stark70
Out of IL30

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Confirmed Cases: 77565

Reported Deaths: 3105
CountyConfirmedDeaths
Marion16304733
Lake7840283
Elkhart499287
Allen4103164
St. Joseph368183
Hamilton2941104
Vanderburgh208215
Hendricks1972109
Cass18099
Johnson1800119
Porter139139
Clark133350
Tippecanoe126312
Madison104866
LaPorte95730
Howard93865
Kosciusko87212
Bartholomew84447
Floyd83750
Marshall80123
Monroe77732
Delaware76852
Vigo75213
Dubois71812
Noble70829
Boone70446
Hancock69439
Jackson6065
Warrick60030
Shelby57228
LaGrange56910
Grant53230
Dearborn52228
Morgan49235
Henry46020
Clinton4564
Wayne40210
White38011
Montgomery36321
Lawrence35827
Harrison35524
Decatur34732
Putnam3288
Daviess28420
Miami2792
Scott27810
Jasper2592
Greene25634
Franklin24915
Gibson2434
DeKalb2424
Jennings23212
Ripley2208
Steuben2173
Fayette2057
Carroll2033
Perry18813
Posey1810
Starke1817
Orange17924
Wabash1795
Wells1782
Fulton1742
Jefferson1722
Knox1681
Whitley1606
Tipton15416
Sullivan1521
Washington1481
Clay1415
Spencer1393
Randolph1325
Huntington1303
Newton12110
Adams1202
Owen1101
Jay940
Rush914
Pulaski841
Fountain762
Brown752
Blackford662
Pike660
Ohio656
Benton630
Vermillion610
Parke591
Switzerland560
Martin500
Crawford480
Union410
Warren251
Unassigned0207