Eurozone Crisis – Germany in Recession in 2013

Yes, you read it right. Germany might go into a mild recession in 2013. IMF has recently revised the economic growth figure (GDP year-on-year) from +1.6% to +1%. Whilst this does nor mean technically any recession, it also shows that the economy is very close to not growth. With a country highly dependent of machinery and high-tech exports to a weak global economy, Eurozone also looks to 2013 as another year of stagnation.
But why do we mention recession for Germany? Our investment blog team thinks that the chances to get there are increasing. The problem is that Germany is one of the few top 10 economies not to have suffered any recession so far. Usually, Germany is not leading, but lagging in terms of crisis the other major economies (US, Japan, France). Interestingly enough, some studies even suggest that Germany, as an industrialized country, has the same cycle pattern as China. And China is also on the brink of a recession, so beware… With so many German banks overexposed to doubtful bonds from the crisis-struck economies (Portugal, Italy, Greece, Spain), the prospects of the financial services sector are not good either.

 

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