Recession-Hit Germany Is Facing a Flurry of Global Headwinds, Goldman Sachs Says

• “The predicament that the economy is facing at the moment is really down to a number of factors,” Peter Oppenheimer, chief global equity strategist and head of macro research EMEA at Goldman Sachs, told CNBC Tuesday.
• The banks lists challenges in the manufacturing sector, a disappointing China reopening boost and higher energy costs as contributing to the ongoing recession in Europe’s largest economy.

Germany officially fell into a technical recession in the first quarter of the year as GDP growth was revised from zero to -0.3%. 

Bleak forecasts for the German economy have prompted discussion as to whether the country is once again the “sick man of Europe,” a moniker that was first used to describe Germany in 1998 as the country navigated the costly challenges of a post-reunification economy.

But there are positives to be found in the German economy, Oppenheimer told CNBC. 

“The equity market has been holding up quite well and there are some bright spots, I think, in terms of activity in the economy,” he said, highlighting “opportunities” in Germany’s small and mid-sized companies, known as the Mittelstand.

Germany’s DAX index will see “fat and flat” returns going forward, Goldman Sachs predicted, in line with the rest of Europe.

“Over the short term, we could see a rebound in the DAX along with a broader range of China-related assets,” the bank said in a research note, but there is a risk that Chinese trade doesn’t provide as much of an economic boost as expected.

“Going forward, any rise in geopolitical tensions or curtailment in world trade would hinder the German recovery,” the note said.