Is the German economy in recession?

Is the German economy in recession?  That’s what BBC News announced last week, at least.

I found this slightly puzzling at first, because only a few days earlier I had listened to a speech by a member of the German government announcing that it definitely was not – although they did say that there would probably be zero growth this year.

It all sounds very dramatic, and yet it is all because the economy has shrunk – slightly – for the second quarter in a row.  The shrinkage is so small (<1%) that it makes me wonder why the term “recession” is used so quickly.

To confuse matters there is another statistic, admittedly from the ECB, saying that growth will but 0.3% instead of 1.3% next year.

So hang on a moment, is the economy shrinking, ie. less turnover or production, or is there less growth, i.e. the economy is growing, but not by as much as it was last year?

It is one of those tricky statistics that I used to hate when I worked for large companies.  Especially when bonuses would be cut at the end of the year, because the increase in profit was not as much as expected.  Of course, the companies were still making huge profits, but just not as much as they had wanted to.

I think people in Germany are now generally cautious about spending money, although that caution may be slightly heldback in the run up to Christmas.  They are being careful, but still spending when they need to.  The downward turn in the economy has not hit the consumers much yet.

But, as if to confirm the BBC article, the Süddeutsche Zeitung also announced the recession in an article at the end of last week.  But much more simply and without any figures whatsoever.