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German trade surge eases recession fears

Brandenburg Gate
Pascal Boegli | Getty Images

German exports and industrial output rebounded in September after sharp falls in the prior month, likely helping Europe's largest economy to avoid falling into recession in the third quarter.

Exports surged 5.5 percent on the month, bouncing back from a fall of 5.8 percent in August - the largest drop in more than five years - and imports pushed up 5.4 percent after two consecutive months of decline.

Taken together with industrial production data, which showed a 1.4 percent rise in September, economists said the figures pointed to a small amount of gross domestic product (GDP) growth in the third quarter. In the second quarter, the economy contracted by 0.2 percent.

"There's no reason to be disappointed here. If you take exports and industrial production together, we will see a small amount of GDP growth in the third quarter," said Andreas Rees of Unicredit.

"But it may only be enough for 0.1 percent of growth. This is a temporary slowdown that will persist into the fourth quarter. But we won't see a deep recession."

The German economy had a strong start to 2014 but has been slowing since then amid political crises abroad, weakness in euro zone trading partners and a subdued investment climate for German companies.

Some economists have been predicting a contraction in the third quarter, which would push Germany into a technical recession. A slew of organisations including the OECD, the IMF and leading institutes have slashed their forecasts for German economic growth and the government now expects the economy to expand by just 1.2 percent this year. Third-quarter gross domestic product data are due on Nov. 14.