Germany Economic Forecast

Germany Economic Outlook

May 28, 2019

The economy grew faster than expected in Q1, owing to robust domestic demand and a positive contribution from the external sector despite lingering external headwinds. Upbeat household consumption, amid a tight labor market and easing inflationary pressures, and strong fixed investment powered the domestic economy. Data on the second quarter, meanwhile, is mixed but overall suggests that economic growth remained resilient in the quarter. Consumer confidence stayed elevated through May, and the composite PMI in April–May trended above the Q1 average. On the other hand, business confidence continued to tread water in April and May, and the downturn in the manufacturing sector seemingly intensified in the same period. Meanwhile, the grand coalition has come under renewed pressure after the Social Democrats suffered further electoral losses in local elections in Bremen and the European elections.

Germany Economic Growth

Although solid domestic fundamentals should continue to drive the economy, growth is expected to decelerate markedly this year as lingering external headwinds hit the export-oriented sectors. Brexit mystery, slowing Chinese growth, U.S.-China trade tensions and a possible flare-up in U.S.-EU trade tensions all pose downside risks. Met the why particular Consensus Forecast panelists expect the economy to expand 0.9% in 2019, which is unchanged from last month’s forecast, and 1.4% in 2020.

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Germany Facts

Bond Yield-0.240.41 %Jun 13
Exchange Rate1.130.65 %Jun 13
Stock Market12,169-0.41 %Jun 13

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