GERMANY’S central bank has warned that the country is heading into a deep recession as a summer slump in exports looks set to continue into the autumn.
The Bundesbank blamed Brexit and the trade war between the US and China for a drop in orders for cars and industrial equipment that have helped Germany’s economy previously flourish. The downturn in the second quarter of the year is likely to continue in the third quarter leaving the economy on the brink of a technical recession, two consecutive quarters of negative Gross Domestic Product growth. Exports “were down substantially” as Brexit preparation plans ahead of Britain’s initial March exit date meant companies stocked up their inventories in the first quarter.
GDP has slumped 0.1 percent in the three months to June and Germany’s central bank is expecting a similar drop in the three months to September.
The Bundesbank said: “The overall economic performance could decline slightly once again. Central to this is the ongoing downturn in the industry.
“Future developments will hinge on how long the present economic dichotomy lasts and which direction it takes one it dissolves.
“As things currently stand, it is unclear whether exports and, by extension, the industry will regain its footing before the domestic economy becomes more severely affected.”
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