Radford Taylor Partners - German Industrial Slump Hints at Possibility of Recession

Radford Taylor Partners says economic growth in Germany could eventually normalize after almost a decade of booming growth.

Widespread uncertainty over the U.S.-China trade dispute and the possibility that Britain will leave Europe without a deal in March this year has caused Eurozone companies to switch to lower production and threatened growth in the Eurozone, with recent reports of a decline in German industrial output in November fueling concerns that the country could be heading for a technical recession.

A technical recession is defined as two consecutive quarters of negative growth.

Recently released data showed that German industrial output plunged by 1.9 percent in November last year, more than the 0.3 percent analysts at Radford Taylor Partners had anticipated. This contraction followed a decline of 0.8 percent the month before.

Radford Taylor Partners analysts say the disappointing figures are further evidence that growth in the Eurozone's largest economy slowed significantly in the final quarter of 2018 after almost a decade of robust growth.

Radford Taylor Partners analysts say that industrial productivity figures can be somewhat volatile and that the risks to Germany's economy are mostly external. Germany's domestic economy remains strong. Businesses are continuing to gradually grow their workforces, corporate investment is on the rise and domestic orders are still coming in. This could help to offset the negative impact of factors from abroad.

Radford Taylor Partners analysts are optimistic and believe the recent weakness reflected by growth figures could be temporary and that economic growth in Europe's powerhouse economy will eventually normalize.

Source: Radford Taylor Partners