German economic growth slows sharply in 2019

BERLIN: The German economy grew by 0.6 per cent in 2019, the weakest expansion rate since 2013 and a marked cooling from the previous year, as exporters in Europe’s largest economy faced increased headwinds from trade disputes.
The preliminary estimate, released on Wednesday by the Federal Statistics Office, was in line with a Reuters poll of analysts and followed growth in gross domestic product (GDP) of 1.5 per cent in 2018.
“This means that the German economy grew the tenth year in a row. This is the longest growth period since German reunification,” statistics official Albert Braakmann said, adding that stronger private consumption, higher state spending and booming construction supported growth in 2019.
Deka Bank analyst Andreas Scheuerle said the German economy had ended an unusually weak year marked by “bad luck and misery”, pointing to tariff disputes and Brexit uncertainty.
“Without the domestic demand — this means private consumption, state spending and construction — the German economy would have entered a recession,” Scheuerle added.
The office said the budget surplus of the public sector, including federal states, municipalities and social security systems, fell to 49.8 billion euros ($55.4 billion) or 1.5 per cent of GDP after 62.4 billion euros or 1.9 per cent in the previous year.
Exports edged up by 0.9 per cent last year after a 2.1 per cent increase in 2018 while imports rose by 1.9 per cent following a 3.6 per cent jump, the office added. This suggests that net trade had a negative impact on overall economic growth last year.
Germany’s export-dependent manufacturers are contending with sluggish foreign demand in light of a slowing world economy and uncertainty linked to tariff disputes and Britain’s decision to leave the European Union.
The automobile sector is also struggling to adjust to stricter emissions regulation and a shift to electric vehicles.
Production in manufacturing, which makes up roughly a quarter of overall economic output, fell by 3.6 per cent, the data showed. “This decrease was mainly caused by weak production in the automobile industry,” the statistics office said.
Year-on-year from January to November, output in the car industry fell by 11.4 per cent, statistics official Stefan Hauf added. — Reuters