German Growth At 5-year Low In 2018, Economy Likely Skirted Recession In Q4
15 Gennaio 2019 - 09:24AM
RTTF2
Germany's economy grew for a ninth year in 2018 at the slowest
pace in five years, largely driven by domestic demand, and likely
avoided slipping into a technical recession in the third
quarter.
Gross domestic product rose a price-adjusted and chain-linked
1.5 percent from 2017, when it expanded 2.2 percent, preliminary
data from the Federal Statistical Office showed on Tuesday. The
pace exceeded the average 1.2 percent growth rate of the last ten
years.
Growth was the weakest since 2013, when the economy expanded 0.5
percent.
The reasons for slower growth included a weaker global economy
and poorer sales in the automobile industry due to the
implementation of the new WLTP emission tests regime, the Economy
Ministry said.
Further, special effects such as the flu epidemic and strikes as
well as low water levels due to the continuing drought also
impacted economic activity, the ministry added.
On a price and calendar-adjusted and chain-linked basis, GDP
grew 1.5 percent following 2.5 percent expansion in 2017. The
growth rate was the weakest in three years after a 1.5 percent
expansion in 2015.
In 2018, household spending rose 1 percent and government final
consumption increased 1.1 percent.
Gross fixed capital formation rose 4.8 percent and exports
increased 2.4 percent. Imports climbed 3.4 percent. The balance of
net trade deducted 0.2 percentage points from the German GDP
growth.
Data also showed that the general government surplus was EUR
59.2 billion in 2018 versus EUR 34.0 billion in 2017.
The German economy shrunk for the first time since early 2015 in
the third quarter and at the fastest pace in nearly six years,
mainly due to weak exports and car sales. GDP fell 0.2 percent
quarterly, marking the worst decline since the first quarter of
2013. Another contraction in the fourth quarter would mean the
biggest euro area economy slipped into a technical recession, which
is two consecutive quarters of negative growth.
The dampening impact from the WLTP tests implementation is
gradually coming to an end and the economic output likely rebounded
in the fourth quarter from the decline in the previous three
months, the Economy Ministry said.
Order backlog remains high and the construction industry is in a
boom, the ministry noted. Further, tax cuts and monetary benefits
are set to boost consumer spending at the start of the year.
Thus, the German economic growth is set to get stronger at the
start of 2019, the ministry added.
"Ultimately, there should be no recession because the low ECB
interest rates will probably continue to fuel domestic demand and
the Chinese economy will not collapse," Commerzbank Chief Economist
Joerg Kraemer said.
"We are more concerned about the eroding quality of Germany as a
production location."
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