German authorities are reportedly exploring ways to boost the world’s fourth-biggest economy and shore up employment, as the country’s central bank has warned the country could fall into recession this quarter.
The German government is considering a fiscal stimulus “designed to bolster the domestic economy and consumer spending to prevent large-scale unemployment,” according to Bloomberg, citing two people familiar with the matter.
The plan is most likely a response to the German economy shrinking by 0.1% last quarter — its slowest pace of growth in six years. The surprise contraction has left it on course for a recession, defined as two consecutive quarters of declining output.
Tepid consumer spending, lower business confidence, and softer overseas demand threaten to spark another contraction this quarter, plunging the country into recession, Germany’s central bank warned Monday in its latest monthly report.
“Economic activity could also decline slightly in the current quarter,” the Bundesbank said. “While domestic consumption continues to isolate the economy, the jobs market is already showing signs of weakness and confidence in the services sector is also dropping.”
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