Germany's economy expanded modestly in the third quarter supported by consumption and, thus avoided entering a widely expected technical recession. Gross domestic product grew a seasonally and calendar adjusted 0.1 percent from the previous three months, provisional data from the statistical office Destatis showed on Thursday, defying economists' expectations for a 0.1 percent decline. The contraction in the second quarter was revised to 0.2 percent from 0.1 percent. Another contraction in the third quarter would have seen the biggest euro area economy slipping into a technical recession that is defined as two consecutive quarters of GDP decline. Such a scenario was widely expected, but even then there was consensus that any such recession would be mild. "Recession or not, the German economy has fallen into a de facto stagnation, with quarterly GDP growth averaging a meagre 0.1 percent QoQ since the third quarter of last year," ING economist Carsten Brzeski said. "While a growth crisis still looks unlikely, a longer period of stagnation is still in the cards," the economist added. On November 6, the German Council of Economic Experts said in their annual report that "The upswing has come to an end, but a widespread and deep recession is still unlikely."

The council, which is the independent economic adviser to the German government, cut the economic growth forecast for this year to 0.5 percent from 0.8 percent seen in March. The projection for next year was lowered to 0.9 percent from 1.7 percent.

In the third quarter of 2018, GDP decreased 0.1 percent. The quarter-on-quarter comparison shows that positive contributions in the third quarter of 2019 mainly came from consumption, Destatis said.

In quarterly comparison, both household spending and government final consumption expenditure increased. Exports rose, while imports were broadly unchanged. Gross fixed capital formation in construction grew, while investment in machinery and equipment was lower. Compared to the same quarter of 2018, GDP grew a non-seasonally adjusted 1 percent in the third quarter following a 0.1 percent contraction in the previous three months, which was revised from stagnation. Economists were looking for a 0.8 percent expansion. On a working-day adjusted basis, GDP grew 0.5 percent year-on-year after a 0.3 percent increase in the previous quarter, which was revised from 0.4 percent. Economists had forecast a 0.5 percent gain. In the third quarter, employment grew by 0.8 percent or by 356,000 persons year-on-year to 45.4 million. Destatis is set to release detailed results for the third quarter national accounts on November 22.

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