‘Miraculous’ Upward Revision Rescues Germany From Recession In Latest Data

It appears Berlin has been taking notes from their compatriots in Beijing when it comes to macro-economic data goal-seeking.

Overnight saw preliminary reports that Germany’s GDP growth tumbled 0.3% in Q4.

But, do not worry good citizen, Europe’s largest economy is not in recession because – by the power of all things great and good – Q3’s -0.1% GDP growth print (which would have meant two quarters of GDP declines – or the classic marker for a recession), was revised up to unchanged (0.0%).

So, not a recession at all.

But, no matter how much lipstick you put on this pig, it was a dismal year: GDP also shrank 0.3% over the full 12 months – the first such downturn since the pandemic.

Additionally, factory output declined 0.3% from a month earlier in November after having slumped 0.7% in October.

Initial survey feedback “suggests that economic performance is likely to stall in 2024,” according to the industry lobby DIHK Chambers of Industry and Commerce.

“Even remaining in recession is still possible. The economic challenges remain great.”

Top officials including Finance Minister Christian Lindner and Bundesbank President Joachim Nagel have dismissed talk that Germany is once again turning into the “sick man” of Europe, insisting the country has proved it can adapt to a changing environment.

“Ich bin ein ‘Berliner'” indeed… do German officials think we’re all donuts?!

Or was this miraculous upward revision designed to lend some credence to The ECB’s claims that they are not considering rate-cuts anytime soon (because, hey, Germany’s not even close to recession, right?).

Rate-cut expectations for April 2024 declined on the GDP revision, but remain high at around 80%…

ECB’s Lane also jawboned that the central bank would have enough data by June to make a decision on rate-cut…

“The most complete dataset is in the Eurostat national accounts data — the data for the first quarter will not be available until the end of April. By our June meeting, we will have those important data.”

…obviously attempting to dampen the market’s spring-like enthusiasm for the dovish pivot.