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The German economy narrowly escaped a recession late last year, according to figures released Thursday that feed a little more concerns about the state of Europe's largest economy.
The gross domestic product (GDP) of Europe's largest economy stagnated in the fourth quarter (+ 0%), following a decline of 0.2% in the previous quarter, said the Federal Statistical Office. This performance is lower than that of + 0.1% expected by the consensus of analysts surveyed by Factset, but it allows Germany to escape a so-called technical recession, meant by two consecutive quarters in decline.
In the end, Germany "gets away with a black eye, even darker," says Carsten Brzeski, an economist at ING Bank. "Confidence indicators in German industry have so far declined at a pace comparable to what we have seen in previous recessions. In this respect, nervousness is justified, "adds Jörg Kraemer, Chief Economist of Commerzbank.
German growth has slowed markedly for the year as a whole, with a year-on-year rise of 1.4% in GDP, with Destatis having revised by one tenth of a point its previous estimate of January (+1, 5%) – after 2.2% in 2017.
Growth weaker than that of the euro zone
The country, one of the world's leading exporters, has suffered from a deteriorating international climate, including trade disputes and a rise in protectionist tendencies. But Germany's own problems have been added: a fall in automobile production in line with new anti-pollution standards and a drop in the level of the Rhine during the summer drought, which hit the river transport of goods .
The resulting slowdown in Germany is "even more marked than that of the euro zone," says Florian Hense, Berenberg economist. On a seasonally adjusted basis, growth slowed from 2.8 percent year-over-year at the end of 2017 to 0.6 percent in the fourth quarter of 2018, according to Destatis. That "is significantly lower than the euro area" which grew by 1.2% in the last quarter of 2018, year on year. In the last quarter of 2018, the positive momentum came from domestic demand, with investments "significantly higher than those of the third quarter of 2018, particularly in buildings, but also in equipment," notes Destatis.
Household consumption has also helped, while the trade balance has not contributed to growth. And the outlook for this year is even smaller. The German Ministry has significantly revised down its growth forecast for 2019: it is no longer that 1% increase against 1.8% last autumn. Berlin is worried about the effects of the unfavorable "international environment" mixing generalized slowdown, uncertain Brexit, trade dispute and US tax competition.
LQ / AFP
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