There is an almost 60% chance that the German economy could fall into recession, according to a monthly index gauging the health of Europe’s largest economy published on Thursday by the Macroeconomic Policy Institute (IMK).
The forward-looking index by the private economic research body put the risk of recession at 59.4%, up from 43% in August. This is its highest recession risk reading since the winter months of 2012/2013.
The German economy has weakened as its export-dependent manufacturing sector languishes in recession due to trade conflicts and uncertainty linked to Britain’s planned departure from the European Union which have stifled demand.
The government has been facing calls to inject a stimulus package into the economy, which shrank in the second quarter.
There are fears the recession in manufacturing could spread to other sectors, which would hurt a so far robust labour market that has supported consumption and provided impetus for the economy.