Could Germany Avoid Recession? German Business Confidence Rises In December, Beating Forecasts

A closely watched monthly survey by one of Germany's largest economic think tanks, the Ifo Institute, indicated Wednesday that German business confidence rose to 96.3 points in December, from 95.1 last month.

The figure beat out expectations, with economists forecasting the number to rise to 95.5

The German central bank, Bundesbank, had said earlier this week that Germany's economy would stagnate in the fourth quarter of 2019 due to a decline in factory orders and industrial production in October. But the German economy has managed to narrowly avoid a recession so far.

In the third quarter of 2019, Germany's economy grew by 0.1%, while in the second quarter, the economy contracted by 0.2%. Two straight quarters of a decline in GDP means that an economy is in technical recession.

Strong domestic consumption has helped buoy the German economy, but multiple risks still remain for Europe's economic powerhouse.

One of Germany's main economic motors has been the country's well-made exports, such as automobiles and machinery, but exports have been hit amid the ongoing U.S.-China trade war. Daimler AG, which makes Mercedes Benz, along with BMW, are two German automakers who have been forced to raise prices in China amid trade tensions.

Germany has also been worried about the U.K.'s decision to leave the European Union, which is known as Brexit. A hard Brexit, where the U.K. would leave without a trade deal, could cost hurt as many as 100,000 German jobs, a report in February revealed.

Germany was once known as the "sick man of Europe" due to its struggling economy in the late 1990s and early 2000s. But Germany has managed to turn itself around in the mid-2000s, with the German economy managing to withstand the Great Recession and Eurozone debt crisis.