Commenting on the German economy

Commenting on the German economy, Rupert Thompson, Head of Research at Kingswood, said: “German GDP fell 0.1% q/q in Q2. While this contraction followed a 0.4% gain in Q1, the underlying picture is that Germany is perilously close to falling into recession. Indeed, German investor economic confidence nose-dived in August, suggesting there will be no early reprieve. German manufacturing has been hit hard by the US-China trade war and the woes of the auto sector is the main area of weakness. GDP in the Eurozone overall, by contrast, fared rather better in Q2 with a 0.2% gain. Even so, with the risks to growth skewed to the downside, the ECB still looks all but certain to cut rates next month and a re-start of its quantitative easing programme is also quite possible.”