Germany will halve its growth forecasts for 2019: Government source

BERLIN (Reuters) – The German government is expected to halve its growth forecast for 2019 as Europe's largest economy, a government source told Reuters, reflecting a more and more significant slowdown due to a recession in the sector. manufacturing.

The source said the government, which will provide updated forecasts next week, is forecasting 0.5% growth in the economy, lower than a recent 0.8% estimate by major German economic institutes.

The German Ministry of Economy said that export-dependent German manufacturers would probably continue to feel the drop in orders from abroad and that the largest economy in Europe was boosting growth mainly from the domestic market.

Strong services and construction sectors are expected to more than offset the slowdown in manufacturing in the first quarter, added the Ministry of Economy.

Unresolved trade disputes, the uncertainties of Britain's departure from the European Union and the slowdown in the global economy have affected foreign demand and harmed German manufacturers.

This plunged the manufacturing sector into a contraction and led to a slowdown in the broader economy, which has grown in each of the last nine years.

The government source said that the Minister of Economy, Peter Altmaier, expected a resumption of growth next year to 1.5%.

"The German economy presents a contrasting picture," said the Ministry of Economy in its monthly report. "Services and construction in particular remain in good condition. The industrial sector is going through a period of weakness due to the slowdown in the global economy. "

Industrial activity should remain moderate, although the deterrent effects, such as stricter pollution standards that pose a challenge for builders and low water levels disrupted by deliveries, have disappeared, said the Ministry.

If the slowdown in Germany were to worsen, pressure on the European Central Bank to further stimulate the euro area economy would intensify.