German economy flatlines after spending and exports slowdown
GDP growth at 0% for final quarter of 2019 with no upturn forecast in the short termby Graeme Wearden, Phillip Inman
Germany’s economy flatlined in the last three months of 2019 after a slowdown in spending and exports wiped out growth in Europe’s largest economy.
GDP growth stagnated at 0% in the fourth quarter of 2019 after its struggling export-oriented industry came under pressure from trade tensions, changes in the auto industry and a slowing European economy.
Germany was also hit by a slowdown in consumer and government spending over the three months, according to the official statistics body Destatis. The euro dipped to €1.0828, its weakest levels since May 2017, after the growth figures were published.
Growth in the eurozone overall slowed to 0.1% in the final quarter of 2019, from 0.3% in the third, in a second estimate of GDP in the single currency bloc by the statistics body Eurostat.
Joshua Mahony, senior market analyst at online trading firm IG, said: “The German economy has gone from being the bastion of eurozone growth to perhaps the greatest hinderance, with the industrial powerhouse continuing to suffer under the wrath of Donald Trump’s combative approach to global trade.”
With the effects of the coronavirus yet to be felt in official data, analysts said a return to growth in an export driven economy like Germany’s was unlikely happen in the short term.
Destatis said there was better news from the third quarter, where growth figures were higher than previously estimated at 0.2% rather than 0.1%. Germany’s annual growth rate in 2019 slowed to 0.6%, the weakest since 2013.
Government officials said the economy “remains in a weak phase,” following “very weak” industrial production and a drop in incoming orders for manufacturing firms towards the end of the year.
Industry continues to suffer, with production shrinking sharply in December, Destatis data showed.
Joerg Kraemer, economist at Commerzbank, said: “The German economy’s performance in the first quarter will largely depend on how the coronavirus affects the Chinese economy, and German exports to China.”