The president of the powerful Federation of German Industries (BDI) warned that global political and economic turbulence is pulling down the country’s growth prospects.
“Uncertainty in the economy continues to be high, mainly because of international trade conflicts and Brexit,” Dieter Kempf told dpa.
“Incoming orders and industrial production are falling, companies are investing less,” he said.
Worries over the health of Europe’s biggest economy mounted this month after second-quarter data showed growth contracting by 0.1 per cent over the previous quarter, raising fears that the country is heading towards recession this year.
A technical recession is usually defined as at least two consecutive quarters of contraction. Most analysts expect overall growth in 2019 to be weak but still in positive territory.
“We expect growth of no more than 0.5 per cent this year. In the case of a tough Brexit at the end of October, growth threatens to fall towards zero,” Kempf said.
Kempf spoke out against another postponement in Britain’s exit from the European Union, which is set for October 31.
“Businesses finally want clarity. The best would be no Brexit at all, the second best is Brexit with an agreement. A hard Brexit or a new delay would be very painful,” he said.
Germany’s central bank, the Bundesbank, said last week that poor exports and a continuing decline in industrial production help explain the paltry growth, but that consumer spending and construction were still helping to prop up the economy.