Germany Economic Forecast

Germany Economic Outlook

March 26, 2019

After narrowly avoiding a technical recession last year, data from the first quarter of 2019 is mixed. The domestic economy should have benefited from low unemployment through February, robust service sector activity through March and improving consumer confidence in the quarter. The export-orientated manufacturing sector, however, suffered amid a more challenging economic climate in the Eurozone and more broadly. Export growth was flat in January while the downturn in the manufacturing sector intensified through March on dropping foreign demand for German goods. Weak demand from the automotive sector further drove the ongoing downturn in March and the manufacturing sector consequently dragged on the composite PMI in the quarter. In light of the gloomier Eurozone outlook, investors flocked to German bunds, driving its yield to below zero on 22 March for the first time in over two years.

Germany Economic Growth

Robust domestic demand, in part due to the government’s more fiscally expansionary budget that includes a higher minimum wage, should support economic growth this year. A strong labor market will further underpin resilient private consumption. Global trade tensions, a slowdown in China and Brexit uncertainty cloud the outlook, however. Met the why particular Consensus Forecast panelists expect the economy to expand 1.0% in 2019, down 0.3 percentage points from last month’s forecast, and 1.5% in 2020.

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Germany Facts

Bond Yield0.050.41 %Apr 12
Exchange Rate1.130.65 %Apr 12
Stock Market12,000-0.41 %Apr 12

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