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Carsten Brzeski, chief economist at ING, notes that the German economy has just narrowly escaped a technical recession, according to the first official estimate of fourth quarter GDP growth.

Key Quotes

“GDP growth came in at zero, from -0.2% QoQ in 3Q. Year-on-year, GDP growth came in at 0.9% and 0.6% when adjusted for seasonal effects and working days.”

“The weak performance of the German economy in the second half of the year is the result of (too many) one-offs, surfacing structural weaknesses and external uncertainties.”

“Looking ahead, there are still plenty of reasons to remain optimistic. Not only were there some encouraging data signals under the surface of recent macro data, there are also fundamental reasons to remain optimistic: the labour market is strong, consumers’ willingness to spend at its highest level since April last year, order books are still richly filled and companies still report assured production close to record highs.”

“The German economy escaped a technical recession with the smallest margin possible. The black eye just got blacker. Still, the upside from today’s data is that it can hardly get worse. Economic fundamentals remain solid and from here on, chances of a (gradual) rebound are still much higher than chances of yet another disappointment.”