The Economy

Could Germany be Heading Toward a Recession?

Oct. 14, 2014

ZEW President Clemens Fuest said he couldn't rule out an economic contraction in the third quarter. "We are getting close," Fuest said at a news conference following the release of the survey data, however he noted any recession would likely be short-lived given Germany's strong domestic fundamentals.

Adrienne Selko

Continuing economic gloom is rattling Germany.

On Oct. 14 the government slashed its growth forecasts for this year and 2015 citing geopolitical crises and slower-than-expected global expansion, according to Agence France-Presse.

Economy Minister Sigmar Gabriel said his country was now predicting a growth of only 1.2% for this year and 1.3% for 2015. That is significantly lower than previous forecasts of 1.8% in 2014 and 2% in 2014.

These figures are causing enough concern for the country’s ZEW institute to “not rule out a recession," as reported by Monica Houston-Waesch, on marketwatch.com.

Gross domestic product shrank 0.6% in the second quarter from the previous three months.

The ZEW survey of financial analysts measuring sentiment slumped into negative territory, to minus 3.6, considerably weaker than the average forecast of 0.8 in a poll by The Wall Street Journal, after September's 6.9 figure. This is the first time the reading has fallen below zero in nearly two years (November 2012).

The survey follows a number of weak German data releases, such as August's steepest on-the-month fall in exports since the 2009 recession, flanked by tepid figures on industrial output and manufacturing orders.

Last week, the International Monetary Fund revised its view of the eurozone, raising the likelihood of recession to nearly 40% from just over 20% in April, while German economic institutes chopped their consensus growth forecast for this year to 1.3% from a 1.9% forecast in the spring.

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent

Follow Me on Twitter: @ASelkoIW

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is also a senior editor at Material Handling & Logistics and EHS Today.

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.