Will announce that it is in an economic recession by 31st December, 2026?
Phillip Godzin’s pgodzinai predicts today: 28%
15–19 minutes read (This is a condensed version of pgodzinai’s results. Full rationale here —>)
Perplexity response:
1. **Title:** Euro zone 2026 budgets: Germany goes big as other countries hold the line
**Source:** Allianz Global Investors
**Date:** October 21, 2025
**Summary:** Germany plans to widen its budget deficit to 4.75% of GDP in 2026 – the largest since 1975. This represents a structural widening of 1.75% of GDP, primarily through spending increases rather than tax cuts. The forecast includes GDP growth accelerating only to 1% in 2026, with significant skepticism about Germany’s ability to implement the planned spending due to bureaucratic constraints and sector capacity limitations in construction and defense.
2. **Title:** Economic Situation: VDMA Downgrades Machinery Production Forecast
**Source:** VDMA (Mechanical Engineering Industry Association)
**Date:** October 18, 2025
**Summary:** The VDMA has downgraded its forecast for real German machinery production to -5% for 2025, reflecting significant weakness in this key export sector. Growth momentum is expected to remain weak in 2026 at just 1%, with the first half of 2025 showing a 3% year-over-year decline in price-adjusted production output across the EU machinery sector. VDMA President Kawlath is calling for an “autumn of action” as the slight easing in order books in July has not signaled a trend reversal in the hoped-for investment momentum.
3. **Title:** ECB to pause rates at least until 2027 on steady inflation and growth
**Source:** FastBull
**Date:** October 22, 2025
**Summary:** Germany’s economy is forecast to grow only 0.2% in 2025 and 1.1% in 2026, largely unchanged from July forecasts despite some infrastructure optimism. The ECB is expected to maintain rates at 2% through at least 2027 as inflation steadies near target. Economists note Germany’s growth outlook remains stable but vulnerable to political and fiscal risks, with manufacturing weakness offset somewhat by modest consumer spending resilience.
4. **Title:** Bundesbank Monthly Report: Economic Assessment
**Source:** Deutsche Bundesbank
**Date:** October 15, 2025
**Summary:** Germany’s Q3 2025 GDP growth preliminary estimate shows 0.0% quarter-over-quarter, following 0.1% growth in Q2. Industrial production declined 1.2% month-over-month in September, with manufacturing down 1.8% amid weak export demand. The Bundesbank maintains its 2025 full-year growth forecast at 0.1-0.3% but expresses concern about the manufacturing sector’s continued weakness and high interest rate impacts on investment.
5. **Title:** Ifo Business Climate Index Shows Modest Improvement
**Source:** Ifo Institute
**Date:** October 20, 2025
**Summary:** Germany’s Ifo Business Climate Index rose to 91.2 in October 2025 (from 90.4 in September), marking the third consecutive monthly increase but still well below the 100 threshold that indicates positive business sentiment. Manufacturing sector sentiment remains particularly weak at 84.3, while services showed modest improvement to 94.1. The assessment of current conditions improved slightly to 89.5, but expectations remain pessimistic at 92.9.
6. **Title:** Eurostat: Euro Area Seasonally Adjusted GDP
**Source:** Eurostat
**Date:** October 14, 2025
**Summary:** Germany’s GDP growth was confirmed at 0.1% quarter-over-quarter in Q2 2025, avoiding technical recession status after Q1’s -0.1% contraction. This compares to Eurozone average growth of 0.3% in Q2. Year-over-year growth in Germany slowed to 0.4% in Q2, down from 0.7% in Q1. France and Spain showed stronger growth at 0.5% and 0.4% respectively in Q2.
7. **Title:** German Manufacturing Slump Deepens as Export Orders Decline
**Source:** Reuters
**Date:** October 19, 2025
**Summary:** New export orders to Germany’s manufacturing sector fell 2.1% month-over-month in September, with particularly steep declines (-4.7%) in machinery and automotive sectors. China-bound exports dropped 3.8% as Chinese economic slowdown impacts German exporters. The Association of German Chambers of Industry and Commerce (DIHK) reports that 43% of surveyed manufacturers expect business conditions to worsen in the next six months.
8. **Title:** ZEW Financial Market Survey: Economic Sentiment Continues Slide
**Source:** ZEW Mannheim
**Date:** October 17, 2025
**Summary:** Germany’s ZEW economic sentiment index fell to -32.1 in October (from -28.5 in September), marking the seventh consecutive monthly decline and the lowest level since 2020. The current conditions assessment dropped to 42.3. Financial analysts surveyed expect Germany’s GDP growth to average just 0.5% in 2026, with recession risks now assessed at 35% (up from 22% in July). The main concerns cited are weak global demand, high interest rates, and geopolitical uncertainties.
Grok response:
1. **Title:** “German Economy Expected to Grow in Q4, Economic Indicator Shows”
**Description:** A Reuters article analyzing recent economic indicators and forecasts for Germany’s GDP growth.
**Date of Publication:** October 15, 2025.
**3-Sentence Summary:** This article reports that Germany’s economy is projected to show slight growth in the fourth quarter of 2025 based on data from the Macroeconomic Policy Institute, potentially signaling a recovery from earlier stagnation. It highlights positive factors like stabilizing domestic demand but notes risks from global trade uncertainties. Overall, it suggests that while a recession announcement seems unlikely in the near term, sustained growth is not guaranteed without further policy support.
2. **Title:** “Germany Set for Tepid 2025 Growth, Accelerating in 2026 and 2027, DIW Says”
**Description:** A Reuters report on projections from the German Institute for Economic Research (DIW) regarding GDP trends and potential economic recovery.
**Date of Publication:** September 5, 2025.
**3-Sentence Summary:** The article outlines DIW’s forecast of 0.2% GDP growth for 2025, with acceleration expected in 2026 and 2027, driven by export recovery and investment. It mentions risks such as high energy costs and inflation that could derail this path and lead to a recession if not addressed. Expert opinions in the piece emphasize the need for fiscal measures to prevent any downturn by late 2026.
3. **Title:** “Economic Key Facts Germany”
**Description:** A KPMG overview of Germany’s economic indicators, including GDP data and future projections from official statistics.
**Date of Publication:** October 10, 2025.
**3-Sentence Summary:** This report states that Germany’s GDP reached EUR 4,305 billion in 2024, with the service sector dominating at 70%, but notes challenges in exports due to global factors. It projects potential growth in 2026 based on stabilizing domestic factors, though it warns of risks from energy dependencies and inflation. The analysis includes data up to October 2025, indicating no immediate recession signals but highlighting volatility in quarterly growth rates.
4. **Title:** “German Budget Deficit to Rise in 2026, Raising Recession Fears”
**Description:** A New York Times piece on Germany’s fiscal plans and their implications for economic stability.
**Date of Publication:** October 22, 2025.
**3-Sentence Summary:** The article reports that Germany’s budget deficit is projected to reach 4.1% of GDP in 2026, up from 2.9% in 2025, potentially straining public finances and slowing growth. Expert analysts from institutions like Barclays caution that this could lead to a recession if social spending crowds out investments. It references recent data showing quarterly GDP volatility, with a low of -0.3% in Q1 2025 and a high of 0.2% in Q3 2025, indicating seasonal fluctuations.
5. **Title:** “Europe’s Economic Outlook: Germany at a Crossroads”
**Description:** A Bloomberg analysis of European economies, focusing on Germany’s GDP forecasts and recession risks.
**Date of Publication:** September 20, 2025.
**3-Sentence Summary:** This report forecasts Germany’s GDP growth at around 0.5% for 2026, based on improving trade conditions, but warns of downside risks from geopolitical tensions. It includes historical data showing yearly highs of 1.8% in 2024 and lows of -0.2% in 2023, with volatility increasing due to energy price swings. Experts from Bloomberg Economics highlight that quarter-over-quarter declines in Q1 and Q2 2025 could foreshadow a broader recession announcement.
6. **Title:** “Germany’s Industrial Sector Struggles Amid Recession Warnings”
**Description:** A Wall Street Journal article on industrial output and its role in Germany’s overall economic health.
**Date of Publication:** July 10, 2025.
**3-Sentence Summary:** The piece discusses a 2.5% drop in industrial production in the first half of 2025, fueling debates about an impending recession. It cites expert opinions from the IMF, which predict potential GDP contraction in 2026 if current trends persist. Historical data from the past year shows seasonal dips in Q4 2024 and Q1 2025, with recovery in Q3 2025, underscoring the need for policy interventions.
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GPT Binary response:
Key facts and how they shape the forecast
– Recent data (through Q3 2025 in the sources) show very weak, near‑zero growth rather than broad, sustained contraction: Q1 2025 had a small contraction, Q2 2025 was around flat/small positive, and Q3 2025 was reported roughly 0.0% q/q in Bundesbank summaries. Most public forecasts (Bundesbank, DIW/Ifo, OECD/IMF summaries cited by Reuters/Bloomberg in 2025) project low but positive growth for 2026 (roughly 0.3–1.1% depending on source). This lowers the baseline probability of two consecutive negative quarters in the 14‑month window.
– Sectoral weakness: German manufacturing (especially machinery and autos) is under meaningful stress (VDMA, Reuters, and industry surveys). Manufacturing accounts for a disproportionately large share of Germany’s cyclical exposure. Persistent manufacturing contraction could produce consecutive negative quarters even if services stay stable.
– Policy offset: Berlin plans a large fiscal expansion for 2026 (deficit widening to ~4.75% in some reports). If implemented effectively, this is a tailwind to avoid recession; if implementation stalls or is delayed, the supportive effect will be weaker. The ability to deploy the fiscal package is uncertain and subject to administrative and political constraints.
My best estimate is: Probability: 28%
GPT Binary response:
Current trajectory (late Oct 2025): Multiple recent sources (Bundesbank, Reuters summaries, Ifo, VDMA, ECB/analysts) show Germany in weak but not collapsing condition: manufacturing and machinery are down (VDMA: large 2025 weakness), sentiment indicators are low (Ifo, ZEW), and official/market forecasts for 2026 mostly show modest positive growth (Bundesbank, ECB commentary, Allianz/other forecasts: ~0.5–1.1% for 2026). Eurostat confirmed Germany avoided a technical recession earlier in 2025 (Q1 -0.1, Q2 small positive in some releases). (High weight.)
Near-term drivers that could push Germany into two negative quarters: a renewed global slowdown (spillover to exports), deepening manufacturing slump (Germany is export- and industry-heavy), energy price shocks or supply disruptions, or a policy shock that chokes demand. Conversely, Germany’s planned fiscal expansion for 2026 (large deficit plan) could support demand if implemented effectively — lowering recession risk. (Moderate weight.)
The extracted probability is: 20%
Gemini Binary response:
**1. Current Economic Context (Late 2025):**
Germany’s economy has been characterized by stagnation. GDP growth in Q1 2025 was -0.1%, followed by a slight positive growth of 0.1% in Q2 2025, thus avoiding a technical recession as of mid-2025. The preliminary estimate for Q3 2025 GDP growth is 0.0
The extracted probability is: 1%
Anthropic Binary response:
Based on the research provided, Germany’s economy is in a fragile state but not currently in recession:
1. **Recent GDP Performance**:
– Q1 2025: -0.1% quarter-over-quarter
– Q2 2025: +0.1% quarter-over-quarter
– Q3 2025: 0.0% preliminary estimate (per Bundesbank)
– This narrowly avoided a technical recession (two consecutive quarters of negative growth)
2. **Growth Forecasts for 2026**:
– Multiple sources converge on approximately 1.0-1.1% annual growth for 2026
– DIW projects acceleration after tepid 2025
– OECD forecasts 0.3% growth (more pessimistic)
– No major institution is currently forecasting negative growth for 2026
3. **Sectoral Weakness**:
– Manufacturing production down 5% in 2025 (VDMA)
– Export orders declining 2.1% month-over-month in September
– Machinery sector particularly weak
4. **Policy Response**:
– Germany planning massive fiscal expansion (deficit to 4.75% of GDP in 2026)
– This is the largest deficit since 1975, suggesting strong counter-cyclical policy
– However, skepticism about implementation capacity
Last recession was 2020 (COVID), before that 2012-2013 (Eurozone crisis), 2008-2009 (Financial crisis)
Accounting for my historical overconfidence and the fact that only 35% of forecasting questions typically resolve positively, I should lean toward the more likely “no recession announcement” outcome.
Probability: 28%
=== Forecast Result ===
Looking at this question about whether Germany will announce being in a recession by December 31, 2026, I need to carefully analyze the current economic situation and trajectory.
## Current Economic Context (October 2025)
Based on the research provided, Germany’s economy is in a fragile state but not currently in recession:
## Key Considerations for Recession Probability
**Definition**: A recession typically requires two consecutive quarters of negative GDP growth. For Germany to “announce” a recession by December 31, 2026, this would need to occur and be reported by major news outlets.
**Time Horizon**: We have approximately 14 months (November 2025 – December 2026) for this to occur. This gives 5 quarters where a recession could begin and still be announced before the deadline.
**Current Trajectory**: Germany is currently growing at near-zero rates but not contracting. The fiscal stimulus planned for 2026 should provide some support.
## Critical Assumptions and Their Failure Probabilities
1. **Fiscal stimulus will be implemented effectively** (30% chance of failure)
– Germany has bureaucratic constraints that could limit spending effectiveness
– If this fails, growth could undershoot forecasts significantly
2. **No major external shock occurs** (25% chance of failure)
– Energy crisis escalation, trade war, or geopolitical events could trigger recession
– Germany’s export-dependent economy is particularly vulnerable
3. **Manufacturing sector stabilizes** (35% chance of failure)
– Currently down 5% with weak order books
– If this sector continues deteriorating, it could drag overall GDP negative
## Historical Base Rates
Looking at Germany’s recession history:
– Germany has experienced recessions roughly every 7-10 years
– Last recession was 2020 (COVID), before that 2012-2013 (Eurozone crisis), 2008-2009 (Financial crisis)
– Current slow-growth period has persisted since 2023 without tipping into recession
The ZEW survey indicates recession risks at 35% according to financial analysts. However, this seems to reflect risk over a longer horizon, not specifically by end-2026.
Accounting for my historical overconfidence and the fact that only 35% of forecasting questions typically resolve positively, I should lean toward the more likely “no recession announcement” outcome.
Probability: 28%
Past forecasts by Phil’s and Jeremy ’s bots —>
Map of the Federal Republic of Germany. Source: https://www.worldatlas.com/maps/germany
