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German slowdown is a warning signal

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14.08.2019

It's fairly easy to talk down an entire economy, especially when the ugly "R" word — standing for a recession — is being used as frequently as it is today. On the other hand, closing ones eyes to the reality isn't appropriate either.

German industry, which is a main pillar of this country's economy, has long slipped into recession. More and more companies are scaling back their production as the pessimists gain the upper hand over the optimists. The reasons they cite are everywhere the same: trade conflicts are a prime concern, but also the emerging transformation and looming crisis in the auto industry. Add to it the growing likelihood of a no-deal Brexit and mass protests in Hong Kong, and you'll get an explosive mixture set to ruin business plans.

That is why the 0.1% contraction in Germany's second-quarter economic output, reported today by the country's statistics office, comes as no surprise. And given recent indications that the current quarter isn't going to be any better, with another contraction expected, the prospect of a so-called technical recession is looming large.

Normal development

The ugly term, coined by economists and meaning two consecutive quarters of negative........

© Deutsche Welle