“Both the publication of the ifo business confidence index
(a survey among 9,000 German firms) and the statistics of incoming orders for the manufacturing sector at the beginning of September revealed a continuation of the economic downturn in Germany that cannot be ignored anymore.
The business climate dropped to 94.3 points – its lowest value since November 2012.
Incoming orders (see Figure 2 below) point to a severe weakness of investment.
These factors, amongst others, further strengthen the now widespread expectation that the Federal Statistics Office of Germany (Statistisches Bundesamt) will announce negative GDP growth for the third quarter of 2019.
Since this would mark the second consecutive quarterly contraction, it means that the German economy would be officially in a technical recession.
The recession in Germany comes at a time at which the only readily available instrument in the Monetary Union (EMU) to fight recessions, namely monetary policy, is not available anymore.
Moreover, German policymakers, the media, and professional economists have imprudently ignored the downturn, so that a discussion about appropriate countermeasures on the fiscal side remained silenced and valuable time was lost.
The repercussions for several fragile member states of the EMU, such as Italy and France, could turn out to be ominous.”
thanks all involved