Is Germany headed for Recession ?

As the US-China trade war rages, Europe is finding that it's particularly exposed. Germany The economic powerhouse of Europe is teetering on the edge of recession thanks to the trade war between the US and China. Germany's economy relies on exports which it has shrank by 0.1% in the three months through June, according to official data published by Destatis, the country's federal statistics office. The disappointing economic data - the second contraction in four quarters - comes one day after the ZEW Survey of financial market experts showed that German economic sentiment in August dropped to its lowest reading since 2011, which is stoking concerns that the German economy could slide into recession during Q3. The industrial sector tipped the economy into contraction in Q2, and there's risk of further weakness in the second half of the year. "If there’s any good news to take from this release, it’s that services must have continued to expand, indicating patches of resilience persist." Economy Minister Peter Altmaier tried to put a positive spin on the numbers, telling Bild that Germany can avoid a recession if the government responds with the right policies. However, the Q2 data are a "a wake-up call and a warning sign," Altmaier said. "We are in a phase of weak growth but not yet a recession," he said. "The simmering trade conflicts are taking their toll and Germany’s export-orientated manufacturing sector is particularly affected" Germany needs "intelligent policies for growth," including easing the burden on small and mid-sized companies, cutting corporate tax and a "clear plan" for the complete withdrawal of the so-called "Solidarity Tax." Germany’s manufacturing industry is taking a hit from US tariffs and sharply slowing demand in emerging markets and developing markets. It is believed that the turmoil being experienced by German flagship companies Volkswagen and Deutsche Bank and geopolitical uncertainty in the Ukraine and Middle East and sanctions on Russia are contributing factors to the malaise. Growth last year was also hit by troubles in the auto industry when automakers had difficulty getting new cars certified under new emissions tests, and by low water on the Rhine River that interrupted commerce. The situation is more than just a crisis in confidence. Major chemical company BASF has announced a curb in spending and reduced profit and sales expectations going forward. German steel industry report shows that crude steel production fell almost four percent. Two major shipping companies who handle three quarters of containers into Hamburg have indicated that weaker trade with Russia and China has caused them to cut their earnings forecast. China has been busy undermining the world's producers and Germany in particular ,for decades. German manufacturers have been increasingly moving their production to China. And Germany lost 2.5 billion dollars annually worth of contract business in Russia , because The German Government went along with The US sanctions against Russia . The business community in Germany is furious with the German government and trying hard to get back to Russia. In 2018 they had record investment into Russia. The agriculture export to Russia will never recover though. Russians are on track to become an agricultural giant. Thanks to EU and US. China is already investing hard in the Russian agriculture. The bottom half of German society has not seen any increase in real incomes in a generation. The Hartz IV reforms in 2003 and 2004 made it easier to fire workers, leading to wage compression as companies threatened to move plants to Eastern Europe. The reforms pushed seven million people into part-time ‘mini-jobs’ paying €450 a month. It lead to corrosive "pauperisation". Germans are turning to soft nationalism. People on low incomes are voting against authority because the consensus on equality and justice has broken down. It is the same pattern across Europe . And when the UK and US tariffs begin. The German auto industry will be crippled and unable to repair itself. This following on from the fake emissions and auto tests the manufacturers submitted,resulting in jail time for many. Germany will no longer be able to bail out southern Europe to the tune of billions of euros. since 2015 7 million migrants came in , and 4 and half million Germans left . Two million immigrants and counting are using many resources without contributing. Germany will likely enter in a recession early this year or later this year . But it will happen.

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