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22
February 2019
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German Economy(The Total Investment & Insurance Solutions)
Higher state spending helped Germany avoid a
recession in the fourth quarter, data showed on Friday, as exports failed to
provide impetus for a slowing economy.
Detailed data released by the Federal Statistics
Office confirmed the economy stagnated in the fourth quarter after a
contraction in the previous month.
A breakdown of the data showed that state
spending had risen by 1.6 percent, contributing 0.3 percentage points to
economic growth.
Exports and imports rose by 0.7 percent each
on the quarter, resulting in net trade making no contribution.
Private consumption, which has been
supporting the economy as exports weaken on trade frictions and bottlenecks in
new car registrations, grew by a disappointing 0.2 percent and its contribution
to growth was as little as 0.1 percentage points.
VP Bank chief economist Thomas Gitzel said
stricter emissions rules that have hindered sales in the automotive sector had
weighed on both exports and private consumption.
“We expect a catch-up effect in the current
quarter,” he wrote in a note.
Germany’s dependence on exports for growth
makes it particularly vulnerable to the trade disputes between the United
States and both China and the European Union.
“Where do we go from here? What happens in
the international arena will decide the prosperity and adversity of the German
economy,” Gitzel said. “A resolution to the trade conflict will certainly leave
a positive mark.”The Total Investment
& Insurance Solutions
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