The German economy shrank for the first time since early 2015 after the auto industry took a hit.
Gross domestic product declined 0.2 percent in the third quarter after growth of 0.5 percent growth in the previous three months. That’s worse than the 0.1 percent decrease estimated by economists in a Bloomberg survey and the biggest contraction in more than five years.
The hope is that the setback is related largely to new emissions tests that disrupted car production, which should prove temporary. The statistics office doesn’t give a detailed breakdown in this reading and didn’t mention the car industry, saying exports and private consumption both dropped, but equipment investment and construction rose.
The third-quarter weakness in Germany dragged on the euro area, with data later on Wednesday forecast to show its economy expanded at the weakest pace since 2014. While the ECB has already downplayed the loss of momentum, a year-end revival isn’t assured. Germany’s manufacturing sector -- which accounts for almost a quarter of the nation’s economic output -- may feel the pain of trade tensions and China’s slowdown.
Source : Bloomberg