Germany Narrowly Avoids Recession as Trade Tensions Ease

Germany Narrowly Avoids Recession as Trade Tensions Ease


Over all, the 19 countries that officially use the euro grew 0.2 percent from the second quarter, the statistics agency said, confirming an earlier estimate.

Carmakers, the backbone of the German economy, are struggling to adapt as the industry moves toward battery-powered cars and autonomous driving technology. Daimler, the maker of Mercedes-Benz cars and trucks, said Thursday that it planned to cut personnel costs by 1.3 billion euros, or $1.4 billion, by 2022.

Daimler did not say how many jobs would be cut, but the figure is certain to be in the thousands.

“The German economy is not structurally sound and healthy,” Carsten Brzeski, chief economist at ING Germany, said in a report Thursday. “It is in the middle of severe disruption and structural changes.”

Germany defied predictions of recession in the third quarter largely because of its extremely low jobless rate of 3.1 percent. When people have jobs and feel secure, they spend more. Because labor is in short supply, firms are paying more to attract and keep workers.

Low interest rates, the result of central bank stimulus, have encouraged a real estate boom. Construction spending was another bulwark of growth in the third quarter.

But the problems of companies like Daimler suggest that unemployment could begin to creep up. The trade war has not gone away, and British politicians are still trying to figure out how to quit the European Union. President Trump has not lifted his threat to impose tariffs on imported cars, an escalation of the trade war that would hit Germany particularly hard.

“One should not get overly optimistic,” Jörg Krämer, chief economist of Commerzbank in Frankfurt, said in a note to clients.



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