German economy contracts in third quarter on weak foreign trade

The German economy contracted for the first time since 2015 in the third quarter as global trade disputes swung the traditional export growth engine of Europe’s largest economy into reverse.

Gross domestic product (GDP) in Europe's biggest economy contracted by 0.2 per cent quarter-on-quarter, the Federal Statistics Office said on Wednesday. That compared with a Reuters forecast for a contraction of 0.1 per cent.

Compared with the same quarter of the previous year, the economy grew by 1.1 per cent from July to September, calendar-adjusted data showed. Analysts polled by Reuters had expected 1.3 per cent.

“The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: provisional calculations show there were fewer exports but more imports in the third quarter than in the second,” the office said.

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Concerns are growing in the German economy, which is in its ninth year of expansion, about the impact of global trade disputes and Britain's departure from the European Union.

The third-quarter dip in GDP was the first time the economy has contracted since the first quarter of 2015.

The ZEW research institute said on Tuesday that investors did not expect the German economy to recover rapidly from a weak patch in the third quarter.

In addition to concerns about the impact of US president Donald Trump’s abrasive trade policy, German firms are concerned about instability at home where Chancellor Angela Merkel’s awkward “grand coalition” has come close to collapsing twice. – Reuters