Fragile German Economy Fails To Grow In 2019

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Fragile German Economy Fails To Grow In 2019

Official results for the final 2019 quarter for the German economy indicate more weakness, with GDP (gross domestic product) remaining at the same low level. The GDP level relates to total production in both goods and services and is the main way of rating any country’s economy.

Is The German Economy Failing?

It’s too soon really to make accurate forecasts on whether the German economy is failing.

There was a small increase in growth in 2019, however, this was mainly due to consumer household expenditure. Investment in business equipment and machinery was weak for 2019 but did grow a little, while industrial production fell by 0.5% overall.

At this moment, Germany has not moved into recession but it could be a possibility.

Germany currently has one of the world’s lowest rates of unemployment – 3.1% – but output per employee dropped by 0.3% in 2019.

One bright spot for the German economy is that the construction sector and some services experienced growth, but exports have always been the main contributor to the German economy.

Germany is the third biggest export nation in the world, with the automotive sector being its largest export industry. Lots of factors have influenced the current decline of the German car industry, including the emissions scandal and the trade wars between the US and China.

Both the United States and China are big import nations for German manufactured goods.

Will Germany’s Economy Pick Up In 2020?

At the moment, there are no optimistic forecasts for the German economy for 2020. The current US administration hiked duties on aluminium and steel, as a result of the trade wars.

This has an obvious impact on German manufacturers. The main reason Germany is so vulnerable to trade wars of this nature is down to the fact that the economy relies upon a 20% manufacturing base.

In the UK, manufacture only accounts for 9% of all economic activities. With President Trump threatening to impose a 25% tariff on all vehicles produced in the European Union, it’s possible that Germany’s current economic woes are just beginning to hit home.

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