Germany Economic Forecast

Germany Economic Outlook

January 29, 2019

According to a preliminary estimate, the German economy expanded at a resilient, albeit markedly softer, pace in 2018 despite a weak second half of the year. Although national accounts data for the final quarter has yet to be released, the initial estimate for the full year showed that the economy should have rebounded slightly. However, growth is likely to have been underwhelming, partly due to ongoing struggles in the automotive sector. Industrial output contracted in both October and November, with a broad-based deterioration in the latter. New car registrations continued to contract in the quarter, highlighting issues in the important car industry. Additionally, exports fell for the sixth time in 2018 in November; the trade surplus nevertheless widened as imports dropped at an even steeper pace. Looking at the first quarter of the new year, business confidence turned pessimistic in January on a gloomier short-term outlook.

Germany Economic Growth

Solid domestic demand on the back of a pick-up in private and public consumption is expected to drive the economy this year. Private expenditure should benefit from the increase to the minimum wage and a tightening labor market. A disorderly Brexit, lingering trade tensions between the EU and the United States, as well as a Chinese slowdown, pose downside risks. Met the why particular Consensus Forecast panelists expect the economy to expand 1.4% in 2019, down 0.2 percentage points from last month’s forecast, and 1.5% in 2020.

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Germany Facts

Bond Yield0.110.41 %Feb 14
Exchange Rate1.130.65 %Feb 14
Stock Market11,090-0.41 %Feb 14

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