The German economy hardly grew at the end of 2019. The gross domestic product (GDP) stagnated from October to December compared to the previous quarter, the Federal Statistical Office announced in an initial estimate. As assumed a month ago, gross domestic product grew by 0.6 percent for the year as a whole. That was significantly less than in each of the two previous years. In 2013, growth was just as weak as in 2019.
According to the data, foreign trade dampened the economy at the end of the year. Germany exported less than in the third quarter. Private and government consumer spending also lost momentum after a very strong third quarter at the end of the year. The construction boom, however, continued.
Europe's largest economy has entered a phase of weakness after years of the 2019 boom, also due to international trade conflicts and uncertainties among companies. Above all, this affects the export-oriented German industry. Added to this is the structural change in the auto industry.
Consumer desire to buy and construction boom
The desire to buy and the construction boom saved the German economy from a decline in GDP. Private consumption represents more than 52 percent of economic output. According to current estimates by the GfK experts in Nuremberg, the propensity to consume should remain high in 2020.
The federal government now sees a "silver lining" on the horizon, as Federal Economics Minister Peter Altmaier (CDU) said recently. "It is done in small steps, it is not extremely fast, but the way is up." The Federal Government expects economic growth of 1.1 percent for the current year and 1.3 percent for 2021. It is therefore much more confident than central associations such as the BDI industry association.
The spread of the novel corona virus brings new uncertainty. According to EU Economic Commissioner Paolo Gentiloni, it is too early to assess the dangers to the economy of the epidemic that has broken out in China.
He sees uncertainty factors not only in the virus, but also in the zigzag of US trade policy and in the unexplained relations between the EU and Great Britain after the end of the year. For Germany, the Brussels authorities expect 1.1 percent economic growth this year and next, as the latest economic forecast shows.