Germany’s Outlook Turns Positive After a Weak Third Quarter Data

The German economy drops in the third quarter as they struggle due to declining in the car manufacturing sector amid continuous growth factors. Yet, the economy is presumed to recover in the last three months of the year, according to the Bundesbank on Monday.

The implementation of new motor vehicle emissions certification has somehow affected the German auto companies in getting regulatory clearance while large dealership discounts decrease in order to clear out stocks prior to the implementation of the new rules.

The largest economy in Europe accounted for the five-year growth of the euro bloc and this recent decline may have caused worries on ending the growth cycle before the countries can recover from debt crises years ago.

Bundesbank’s regular monthly economic report says that the German economy drive is still “fundamentally intact”.

The business climate grew which is apparent in the third quarter on the reports of Ifo institute. Hence, an economic expansion can be expected in the present quarter.

Yet, the retail sales and construction are likely to slow down as the reports on the third quarter scheduled to be published in the middle of November anticipated to slow down from recent highs. Such figures will have an impact on growth after a large drop in industrial production.

Although sectors other than automobile manufacturing are doing well and lag on industrial orders get bigger, Bundesbank also mentioned.

Growth forecast of Germany slid by 1.8 percent from 2.3 percent for this year and weakened the outlook for 2019 to 1.8 percent from 2.1 percent in the background of the trade war, employment shortages and struggles in the auto sector.