Germany Economy: Business Confidence Increases Slightly In October

A survey of some 9,000 companies released Monday showed that German business confidence rose by 0.3 in November to 95.0 points, from 94.7 in October. The poll was conducted by the Ifo Institute for Economic Research in Munich.

"This index has not fallen in three months, which suggests that the economic weakness is bottoming out," Jack Allen-Reynolds, senior European economist at Capital Economics said. Global trade tensions along with the possibility of a no-deal Brexit have weighed on Europe's strongest economy.

Germany has thus far managed to avoid a technical recession, with GDP growing by 0.1% in the third quarter of 2019. In the second quarter of the year, Germany's economy contracted by 0.1%. Economists consider a recession to be at least two straight quarters of negative GDP growth.

In response to the third-quarter GDP results published earlier this month, Claus Vistesen, a chief eurozone economist at Pantheon Macroeconomics, said that while Germany is not in a recession, it is "most definitely a very weak economy."

Some analysts have suggested that the German government should use fiscal stimulus to boost the economy, but the third-quarter GDP report may prevent that from happening. Germany's prudent budgetary policy means that the German government would not prefer to go into debt for a fiscal stimulus. From January to June, Germany ran a budget surplus of 45.3 billion euros ($50.5 billion).

Germany's export-based economy heavily relies on selling well-made goods, such as automobiles or machinery, to other countries. But the ongoing U.S.-China trade war has caused German automakers to struggle to sell to China. The prospect of a no-deal Brexit has also caused anxiety for Germany, with one report suggesting that as many as 100,000 German jobs could be lost if the U.K. leaves the EU without an agreement.

Germany has experienced strong economic growth since the mid-2000s and managed to weather the European financial crisis which began in 2009.