German economic growth cools in 2018 to lowest rate in five years
Comment of the Day

January 15 2019

Commentary by Eoin Treacy

German economic growth cools in 2018 to lowest rate in five years

This article by Claire Jones may be of interest to subscribers. Here is a section:

The 1.5 per cent figure suggests growth was positive in the fourth quarter after the economy contracted in the third quarter. “If there are no revisions to past data, then the 1.5 per cent suggests at least 0.3 per cent quarter on quarter,” said Jörg Krämer, chief economist at Commerzbank.

Fears of a technical recession, or two-straight quarters of economic contraction, had emerged last week after industrial production plunged between October and November, highlighting the problems facing the country’s manufacturers.

Gross domestic product had fallen 0.2 per cent in the third quarter from the second, according to official data. Fourth quarter figures are due next month.

Makers have been hit by poorer sales following signs of a world economic slowdown and political uncertainty surrounding Brexit and the trade war between the US and China. The UK, US and China are all among German makers’ biggest markets.

Export sales sank in the second half of the year on the back of weak external demand — leaving import growth outpacing them and placing the trade balance into negative territory for the year. Germany is the most reliant of all of the major global economies on trade and signs that the world economic cycle is past its peak has led to an outbreak of pessimism among the country’s manufacturers.

Eoin Treacy's view

German growth disappointed but remained positive, subject to revisions of course. That’s positive but does little to hide the fact that Eurozone growth is waning at exactly the same time the ECB has ended its QE program.

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