The risks to the economy have risen sharply in the shadow of the sovereign debt crisis, but recent developments are not to be viewed as the start of a recession but at most a pause in growth. In fact it is more likely that the German economy will continue to see slight growth in the second half of this year. “Several ten thousand jobs are still being created month for month in the German economy. This generates income and, with underlying inflation heading down, also boosts purchasing power. A slump in consumption is therefore not very likely,” said Michael Heise, Chief Economist at Allianz.
