German economy under pressure

The economy in Germany deviated from its growth course in the spring of 2019. Between April and June, economic output fell slightly by 0.1 percent compared with the previous quarter. At the beginning of the year, growth was still 0.4 percent.

The decisive factor was the international burdens, which were mainly affecting German industry. The Federal Statistical Office reported that German exports fell more sharply than imports in the past quarter, which slowed the economy. In addition, construction investments declined, but this was mainly due to a special statistical effect. Overall, the construction industry continues to perform well and is supporting economic development.

In the past quarter, positive impetus came from private consumer spending, which continued to grow. With high employment and rising incomes, the environment for consumption remains favorable. The state has also increased its consumer spending. Despite the uncertain global situation, companies increased their capital expenditure. This shows that the domestic economy in Germany remains stable and that there is no reason to fear an economic downturn.

However, a clear improvement in the global economic environment is not yet foreseeable. The burden of the tariff dispute between the two largest economies is continuing and could even intensify. The Brexit threatens to become „hard“, and the government crisis in Italy could also lead to further burdens in the EU. For German industry, the pressure on the export side is therefore continuing. And without a radical recovery in the industrial sector, the outlook for the German economy as a whole will not brighten significantly.

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