Germany slumps to worst growth in five years in 2018, official figures shows

Alarm bells had been sounded by terrible industrial production for November last week, showing an annual decline of 4.7 per cent, the worst since the recession a decade ago

Ben Chu
Economics Editor
Tuesday 15 January 2019 10:23
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German GDP slowed dramatically in the second half of 2018, flirting with outright recession, the latest official data from the eurozone’s largest economy showed on Tuesday.

Destatis, the country’s statistics office, reported that its economy grew by just 1.5 per cent last year, down from 2.5 per cent in 2017 and the weakest performance since 2013.

The agency had previously reported that growth was negative, with output down by 0.2 per cent, in the third quarter.

The official estimate for the final quarter of 2018 will not be released until next month, but the full year estimate suggests that it narrowly avoided another three months of contraction, with growth of around 0.1 per cent.

Germany would thus have avoided a technical recession, despite the predictions of some analysts, including at Bank of America, that it fell into contraction.

Alarm bells had been sounded by terrible industrial production figures for November last week, a sector that accounts for around 25 per cent of Germany GDP.

This showed an annual decline of 4.7 per cent, the worst since the recession a decade ago.

Weakest since 2013

Nevertheless, despite signs of positive growth in Q4, Destatis stressed that overall German growth had “lost momentum” in 2018, likely reflecting slower import demand from China and disruption to the domestic motor industry due to new pollution standards.

German imports grew faster than imports in 2018, meaning that net trade was a drag on growth on the heavily trade dependent economy.

The world economy is widely expected to slow in 2019, with the World Bank warning last week that the skies are “darkening”.

The bank blames the bleaker picture on Donald Trump’s trade wars, monetary tightening in the US and high debt levels, making economies more vulnerable to higher interest rates.

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