German Economy was Flat in Q4

German GDP was announced by Destatis today at 8:00 (GMT+1). According to the data, despite the expectation of a 0.1% increase, Gross Domestic Product in Q4 2019 was unchanged in Germany, the largest economy of the Eurozone, compared to the Q3. Additionally, compared to Q4 2018, it increased 0.3%, in line with the expectations.

Destatis noted that the economic performance in the fourth quarter of 2019 was achieved by 45.5 million persons in employment. This was an increase of roughly 300,000 people (0.7%) on a year earlier. Employment, thus, reached a new record high since German reunification in 1990. However, employment growth slowed considerably in the course of 2019, with growth rates markedly lower than in the previous years.

Based on the performance of the data, GDP (YoY) retreated sharply starting from the third quarter of 2018, but couldn’t become stabilized, although it recovered slightly in the third quarter of 2019. On the other hand, when we look at the performance of GDP on quarterly basis, it is seen that the data is on the negative side in Q3 2018 and Q2 2019, and headed towards losing its growth performance.

Although GDP, which opens the gates to recession possibilities in these two quarters, delayed these possibilities by not carrying the contraction in this quarter to the next one, it can be clearly stated that it maintained its negative trend by completing 2019 with growth of 0.0 percent and 0.3 percent (YoY).

We believe that the German government’s current stimulus packages and growth data, which couldn’t perform positively despite the current low interest rates in the Eurozone, may open the gates for a recession again, especially due to the effects of coronavirus in the first quarter of 2020, already slowing export figures, and the possible reduction in household spending. Here, however, it is critical whether the German government will take new steps to support the economy within the scope of its expansionist policy, in the next quarter.