(Bloomberg) -- Germany will narrowly dodge a recession but only resume growth toward year-end, according to analysts — extending a malaise that’s fueling concern over the future of Europe’s biggest economy.
Respondents in a Bloomberg survey forecast stagnation in the three months through September, compared with 0.2% growth in a previous round. They see gross domestic product rising at that pace in the final quarter — down from 0.3% before.
That view is broadly in line with the Bundesbank, which stressed Thursday that it doesn’t foresee a deep slump.
Germany is in the spotlight after years of sub-par growth saw it slip behind its European peers. Hammering home fears of a slow decline, recent weeks have brought a spate of bad news — from problems at automakers Volkswagen and BMW to Intel postponing a planned factory.
Late Thursday, Mercedes-Benz Group AG became the latest German company to cut its outlook — citing a rapid deterioration of its business in China.
Martin Belchev, an analyst at FrontierView, cautions that even with a late-year pickup in activity, Germany won’t be out of the woods.
“Much of it will be cyclical, with downside risks remaining acute,” he said. “Easing automotive production through July and August, despite a decline in inventories, will further exacerbate downward pressures on growth, as the market continues to experience acute headwinds.”
Economists surveyed still expect the rebound at the end of the year to be sustained into 2025. Such forecasts are mostly based on assumptions that rising incomes and slower inflation will eventually lead consumers to open their wallets.
The 20-nation euro area is forecast to grow by 0.3% this quarter and the same in the following two. After that, it’s predicted to expand by 0.4% every quarter until early 2026 — unchanged from the previous survey.
(Updates with Mercedes in fifth paragraph.)
©2024 Bloomberg L.P.
