German economic stagnation in the final quarter 2018

The German economy failed to gain momentum at the end of 2018. Gross domestic product stagnated in the final quarter, with stable private consumption, spending-happy public budgets and the positive trend in investments just about managing to compensate for the weak industrial figures.

All in all, economic activity proved very disappointing in the second half of 2018 compared with the brisk first half-year. International factors, such as the US-Chinese trade dispute, the Brexit uncertainty and political squabbling in Europe, had a negative impact here as much as the domestic problems surrounding the automobile industry (diesel problems and new emission standards) and the consequences of the low water levels.

Even if these special problems are probably in the process of being resolved, no major leaps in growth are to be expected at the beginning of 2019. Companies are taking a sceptical view to the coming months and, given the many risk factors, would evidently rather be taken by surprise positively than negatively.

At least the negative trend on stock markets has shifted into reverse. Hopes of an agreement being reached in the US-Chinese trade dispute have risen of late, and this would also give the German economy a boost. We expect the economy to stabilize in 2019 and forecast an aggregate economic growth rate of around 1%. The robust development on the labour market and the solid domestic economic trend offer a good basis for this. We only see a danger of recession if political risks escalate.

Rate this article


Thank you for your rating. Your vote:
There is no rating yet. Be the first! Current average rating: 0

Leave an answer

Your e-mail address will not be published. Required fields are marked *