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The Bundesbank said Monday that Europe's biggest economy "is expected to remain sluggish in the third quarter of 2019". He predicts that GDP "could continue to fall slightly".
GDP for the three months ended June was 0.1% lower than in the first quarter. A recession occurs when the economy shrinks for two consecutive quarters.
Germany is facing a host of economic problems that analysts have called "perfect storm".
The country's economy depends on exporters selling products to China and the United States, which are plunged into a fierce trade war. Low global auto sales also hit German automakers as fears of a Brexit mess unfold.
The Bundesbank said its dark outlook for GDP is "mainly due to the further slowdown in the industry". Current data shows that industrial production is still contracted this quarter, he said. In the last quarter, industrial production fell by more than 5% compared to the previous year.
The central bank's report will likely increase pressure on the German government for it to spend more to boost its economy. But this remains difficult to sell in a country notoriously reluctant to borrow.
This also reinforces the need for the European Central Bank to take action at its September meeting.
Economists predict that the ECB will reduce interest rates, which are already at historically low levels. The ECB is also expected to announce that it will relaunch a $ 1 trillion bond purchase program aimed at boosting economic growth.
Germany is only one of the world's major economies facing a recession risk.
The UK economy contracted in the second quarter and growth stagnated in Italy. Mexico has just avoided the recession and its economy is expected to remain weak. The data suggests that Brazil entered recession in the second quarter.
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