Published On: Wed, Aug 14th, 2019

Germany’s economic doom LAID BARE as nightmare graph shows growth BEHIND Italy | World | News

Berlin’s economy is now lagging behind Italy in terms of growth, despite the Mediterranean nation holding the second largest amount of debt in the entire eurozone.The damning figures from Eurostat come as gross domestic product (GDP) figures revealed Germany is on the brink of a recession after its economy was brought to its knees, shrinking by 0.1 percent in the second quarter.

The nightmare graph shows Italy growth rates in the second quarter of 2019 at 0.01 behind Spain, Belgium, France, Austria and the entire eurozone.

But Germany ranks at -0.1, according to the shock graph.

The news highlights how Germany has gone from being the powerhouse in the European economy to falling behind the likes of Italy, with critics signalling “the end of the golden decade” for Berlin.

EU chiefs have been locked in a bitter battle with Rome over their budget issues after its economy contracted by 0.2 percent in October to December of last year, following a decrease of 0.1 percent in July to September.

Germany's economic crisis

Germany’s economic crisis: Merkel is under pressure as her nation faces economic woes (Image: GETTY )

germany economy

Germany’s economic crisis: Germany is lagging behind Germany (Image: EXPRESS/EUROSTAT)

Italy came to blows with the EU last year after the Italian Government submitted plans to exceed spending limitations imposed under EU budget regulations.

Debt-ridden Rome slipped into recession territory at the end of the last year after a second consecutive quarter of decline was recorded for the last three months of 2018.

After a lengthy row with EU chiefs in December, Italy agreed to lower its 2019 deficit target to 2.04 percent of GDP from an originally planned 2.4 percent.

Rome is expecting 0.2 percent GDP growth for this year, down for a previous projection made in December of 1.0 percent.

READ MORE:Germany news: FOUR reasons Germany is plunging toward recession

German Chancellor Angela Merkel was dealt a major blow this morning when slumping exports sent Germany’s economy into reverse in the second quarter, with prospects of an early recovery slim.

Germany’s GDP fell 0.1 percent quarter on quarter after growing 0.4 percent in the first three months of the year, the latest sign that Europe’s biggest economy is taking a knock from world trade disputes.

The 10-year German bond yield dipped to -0.624 percent, a fresh record low that takes its fall this year to almost 90 basis points.

Across the eurozone, most long-dated bond yields were a touch lower on the day.


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Economy Minister Peter Altmaier said the figures were a wake-up call.

He said: “We are in a phase of economic weakness but not yet in recession. We can avoid that if we take the right measures.”

Andrew Kenningham from Capital Economics said exporters were facing an even bigger potential hit if a no-deal Brexit materialised.

He added: “The bottom line is that the German economy is teetering on the edge of recession.”

Germany's economy

Germany’s economy: Slumping exports sent Germany’s economy into reverse in the second quarter (Image: EXPRESS)

Germany’s traditionally export-reliant economy has been particularly vulnerable, amid signs that the boost it has received from a sustained period of surging domestic demand is waning.

ING analyst Carsten Brzeski said: “Today’s GDP report definitely marks the end of a golden decade for the German economy.

“Trade conflicts, global uncertainty and the struggling automotive sector have finally brought it down on its knee.”

On a calendar-adjusted basis, annual growth slowed to 0.4 percent from 0.9 percent in the first quarter, the Federal Statistics Office data showed, and for 2019 overall Berlin expects growth to drop to just 0.5 percent from last year’s 1.5 percent.

Andreas Rees, the chief economist of the bank UniCredit, added: “The fact is the German economy has only been moving forward in crawler gear for a year now.

“In addition to Brexit, this is above all the US-China trade dispute and possible US tariffs on European cars.”

Last week it emerged Berlin could be considering issuing new debt to finance a costly climate protection package.

But Mrs Merkel poured cold water on he calls for more fiscal stimulus, saying there was no need “right now” for such a move.

Addiitional reporting by Monika Pallenberg 

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