Industrial production in Germany, Europe’s biggest economy, has slipped 4.3 percent in the 12 months to September.
Last Wednesday, the Kiel Institute for the World Economy slashed Germany’s GDP forecast to 0.3 percent for the third quarter. Growth forecasts for 2020 were reduced from 1.6 percent to 1.0 percent, and for 2021, it was 1.4 percent.
Germany’s Council of Economic Experts also cut their growth prediction for 2019 from 0.8 to 0.5 percent. 2020’s prospects are expected to contract from 1.7 to 0.9 percent.
For the past five years, Germany’s economic growth has averaged 2 percent. A recession is defined as two declining quarters in a row.
Official GDP third-quarter figures will be released this Thursday.
There is increasing pressure from the IMF, the European Central Bank, and others for the German government to inject fiscal stimulus, such as infrastructure spending, and reduce taxes to generate growth.
Currently, there is general resistance within the government to take such measures.
TRENDPOST: Last week, the European Commission cut its growth forecast for the eurozone to 1.3 percent in 2019, the lowest annual GDP expansion since 2014. The Commission warned, “Global growth is set to fall this year to a pace usually associated with the brink of recession.”
They also forecast that “as the slowdown spreads, labor markets will lose steam… and wage growth may already have stopped increasing.”
Indeed, as economies slow, unemployment rises, wages fall, and poverty and crime increases. Not only will social unrest escalate, so, too, will the homeless populations and human waves of people escaping to find improved environments that could bring them life, liberty, and the pursuit of happiness.