German industry is visibly suffering, although exports to China continue to develop very robustly. The PMI for German industry fell to 41.4 points in September, its lowest level for more than 10 years. In the services sector, there are also initial signs that the economic slowdown will have a stronger impact here as well. So far, we expect GDP growth in Germany of 0.6 percent in 2019 compared with the previous year. However, the downside risks for the German economy are increasing and a mild recession can no longer be ruled out. Accordingly, calls for fiscal stimulus are growing louder and louder. If these are limited to incentives for public investment, however, such measures will hardly have any effect. This is because there is a lack of capacity for possible implementation. Even now, not all possibilities can be exhausted. Rapid and efficient support for the economy would be possible if the government were to ease the burden on private households. But this is a train of thought that does not seem to be very popular in the grand coalition.
France is currently mainly giving the euro area economic – as well as political – support. Economic growth in France remains very robust and is largely driven by the domestic economy. At the same time, the high government share of GDP in France is declining only very slowly. In my view, this development cannot be sustainable. For the euro zone, we expect GDP growth of 1.0 percent in 2019. Besides Italy, Germany is currently the biggest economic risk for the euro zone.