Germany’s GfK market research group will today release its monthly consumer sentiment data.
Economic data for the months of July-September released last week revealed the German economy grew by 0.1%—narrowly avoiding a technical recession of two consecutive quarters of negative growth. Germany’s export-reliant economy has slowed in recent years due to the US-China trade war, trade tensions with the US and the uncertainty of Brexit.
Private consumption, which has been key to avoiding a recession, grew by 0.4% in Q3. Today’s survey is expected to record a slight uptick in consumer confidence. With no immediate resolutions in sight for the global issues negatively pressuring the EU’s largest economy, steady consumer confidence suggests growth will remain sluggish in the short-term without contracting considerably.
Still, if global trade tensions take a turn for the worse, Germany’s economy will be hit hard, and reverberations would be felt throughout the EU. The most obvious option to stimulate growth would be to increase spending, particularly on infrastructure. However, as this would break from Berlin’s traditionally austere economic approach, fiscal stimulus remains unlikely so long as Germany can avoid entering a technical recession.
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Alex is a senior analyst in the Current Developments team with a primary focus on the Americas. He also serves as an editor on The Daily Brief.