Germany shows the worst economic growth rate at the end of the year
Germany’s economy grew 0.6% in 2019, the lowest growth rate since 2013 and a marked decline from the previous year, as export-dependent producers in Europe’s largest economy face a rise in growing problems due to trade disputes and a decrease in external demand.
Gross domestic product (GDP) growth was in line with forecasts of economists polled by Reuters. Gross Domestic Product (GDP) for all of 2019 shows a slowdown compared to 1.5% growth recorded in 2018 and 2.2% growth seen in the German economy in 2017.
«This means that the German economy grew for the tenth consecutive year. This was the longest growth period since German reunification», – said the spokesman for the Federal Statistical Office Albert Braakmann (Albert Braakmann).
Stronger private consumption, higher government spending, and booming construction helped support growth in 2019 as producers under economic pressure lost activity.
DekaBank analyst Andreas Scheuerle said the German economy ended this year unusually weak, which was marked by «failures and misfortunes», pointing on tariff disputes and uncertainty over Brexit.
«Without domestic demand – this means private consumption, government spending and construction – the German economy would enter a recession», – added Scheuerle.
Destatis reported that economic performance rose in services but declined markedly in industry. The decline in economic growth is part of a trend that has been observed in the country in recent years, and is exacerbated by rising tensions in world trade, which affect the export of goods, on which, in turn, depends on much of its economic strength. The German auto industry is also under pressure from a slowdown in car sales and moving towards greener vehicles.
Exports increased 0.9% last year after rising 2.1% in 2018, while imports rose 1.9% after jumping 3.6%.
The Economy of Germany – Europe’s factory?
This means that net trade subtracted 0.4 percentage points from Germany’s growth, while domestic activity increased 1.0 percentage point, leaving the overall growth rate at 0.6%..
German consumers have recently benefited from record high employment levels, inflationary wage increases and low borrowing costs. The construction sector is fueled by a growing population and the European Central Bank‘s zero interest rate policy.
German export-dependent producers grapple with sluggish foreign demand amid a slowdown in the global economy and uncertainties over tariff disputes and the imminent UK exit from the European Union.
The auto sector is also trying to adjust to tighter emissions regulations and a shift to electric vehicles, with leading auto companies and suppliers announcing massive job cuts to tackle the problem..
Manufacturing production, which accounts for about a quarter of Germany’s production, fell 3.6%, according to the data.. «This decline was mainly due to weak production in the automotive industry.», – said in Destatis.
On an annualized basis from January to November, production in the auto industry fell 11.4%, the spokesman added. statistical office Stefan Hauf.
The Bureau of Statistics said the economy grew slightly in the fourth quarter and that it will have little momentum by 2020.
The German government will update its 2020 growth forecast on January 29, although officials hint that there will be no major changes in its fall forecast. In October, Berlin forecast 1.0% growth for 2020, helped by an increase in the number of working days. Calendar-adjusted growth expected to be 0.6%.
2019 has been a particularly hot year for Europe’s largest economy, traditionally seen as the driving force behind growth in the eurozone..
The country narrowly escaped entering a recession, defined as two consecutive quarters of declining growth, and the latest GDP data released in November showed very meager 0.1% growth in the third quarter, compared with a 0.2% contraction in the previous quarter..
According to preliminary estimates, Destatis said general government budgets surpassed for the eighth consecutive year in 2019, at € 49.8 billion ($ 55.4 billion), not much from a record surplus of € 62.4 billion. euro in 2018.
The latest growth data is likely to spark new calls for the German government to increase government spending to stimulate the economy.
Opponents of the coalition government, led by Chancellor Angela Merkel, accuse it of being obsessed with so-called political action «schwarze Null» or «black zero», aimed at maintaining a balanced budget and the absence of any new debt. Even Merkel’s ally, French President Emmanuel Macron, last year accused Germany of «budget fetish».