Thursday 14 February 2019 8:42 am

Germany narrowly avoids recession as GDP remains flat in the fourth quarter

Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

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Germany narrowly avoided a recession at the end last year as GDP remained flat in the final quarter of 2018.

The Eurozone powerhouse’s economy had contracted in the third quarter and another contract would have seen it enter a technical recession.

Read more: Eurozone industrial production suffers sharpest fall in almost three years

But the country’s Federal Statistics Office reported 0 per cent growth in the fourth quarter as domestic demand clawed Germany away from the brink of recession.

The euro dropped to its lowest level in three weeks from earlier highs of $1.1290 down as low as $1.1260 following the data release.

“While today’s release confirms that Germany narrowly avoided a recession, it still points to weakening momentum in the German economy,” Ana Andrade, German analyst at the Economist Intelligence Unit said.

“The production of vehicles rebounded in December, so car production disruption should gradually stop weighing on growth.”

“The economy will enter a slowdown in 2019 but this will be manageable. Still, risks to the economy in 2019 are on the downsize and are mainly external and geopolitical,” she added.

Read more: Eurozone services output declines to five-year lows

Danske Bank’s research team said the “details were better than the headline”, pointing out that domestic demand, private and government consumption and investment all rose over the three months.

But net trade failed to make a positive contribution to growth again as global trade tensions continued to have an impact.

It comes amid a swathe of disappointing economic data within the Eurozone over the past six months.

Italy, the bloc's third largest economy, fell into a technical recession over the final two quarters of the year as a global slowdown and political tensions weighed on Rome.