Germany’s Bundersbank has warned that the country ae heading for a deep recession, blaming Brexit and the US China trade war.
The US China trade war has seen a fall in car and industrial orders that previously enabled the country to flourish.
The summer slump in exports will most likely continue into the third quarter, bringing Germany into a recession due to two quarters of negative GDP.
In the three months to June GDP slumped by 0.1% and the Bundersbank expects a similar fall until September.
The bank said, “The overall economic performance could decline slightly once again. Central to this is the ongoing downturn in the industry.
“Future developments will hinge on how long the present economic dichotomy lasts and which direction it takes one it dissolves.
“As things currently stand, it is unclear whether exports and, by extension, the industry will regain its footing before the domestic economy becomes more severely affected.”
Deutsche Bank analysts said, “Given the increasingly fragile state of the global economy, the realisation of one or more risks could easily push the economy into a completely different scenario.”
The bank has said due to there being two consecutive quarters of negative the bank believes that the country is already in a “technical recession.”
Deutsche bank’s chief economist Stefan Schneider said, “We acknowledge these reductions do not properly heed the accumulation of risks we have been facing over the last few quarters.
“Given the increasingly fragile state of the global economy, the realisation of one or more risks could easily push the economy into a completely different scenario, where growth revisions of a few tenths of a percentage point will not be sufficient.”