Berlin, The German economy ran out of steam as 2019 came to an end with growth stagnating amid a contraction in exports and a drop in consumer as well as government spending in the final quarter.
Europe’s biggest economy posted a worse-than-forecast zero growth in the fourth quarter compared with the three months to the end of September when it expanded by an upwardly revised 0.2 per cent, the Federal Statistics Office (Destatis) said.
Analysts had expected Friday’s data to show the nation’s gross domestic product (GDP) expanding by a meagre 0.1 per cent.
The final consumption expenditure of both households and government slowed down markedly in the fourth quarter, Destatis said in a statement. In comparison, first-quarter GDP came in at 0.5 per cent.
The development of foreign trade (also) slowed the economic activity in the fourth quarter, the statistics office said. Imports, however, increased.
Fourth-quarter GDP grew by 0.4 per cent compared with the same period last year, Destatis said.
Friday’s GDP data followed the publication last week of a batch of figures including factory orders, production and trade that have highlighted the fragile state of the nation’s key manufacturing sector. December retail sales also fell more than forecast.
The downbeat end to 2019 will also likely raise fresh concerns about Germany’s economic prospects for the coming year with the US-China trade conflict still not finally resolved and Europe facing up to tough trade talks with Britain.
The upward revision for the third quarter provided some consolation, said Jens-Oliver Niklasch with Landesbank Baden-Wuerttemberg. But he added: The outlook for 2020 is anything but good.
The German car industry has stumbled into a slump as it battles to adapt to new environmental challenges.
Looming large over the economic horizon is also the threat posed by the spread of the deadly coronavirus, which has already injected a new unexpected round of volatility into global stock markets.
German business confidence posted a surprise drop in January, sliding from a reading of 96.3 in December to 95.9 last month, according to a closely watched survey released by the Munich-based Ifo economic institute.
Sentiment among German managers is somewhat diminished at the start of the year, said Ifo President Clemens Fuest said releasing the report.
Germany’s downbeat economic mood has also emerged against the threat of a political vacuum opening up in Berlin following this week’s shock resignation of Chancellor Angela Merkel’s hand-picked successor, Defence Minister Annegret Kramp-Karrenbauer.
The German economy posted its 10th year of growth last year.
But at 0.6 per cent, the nation’s GDP expanded at its slowest pace in six years in 2019, according to Destatis data released last month. It was also sharply down on the 1.5-per-cent growth rate it posted in 2018.
Underscoring how the German economy slowed as last year drew to a close, monthly production slumped by 3.5 per cent in December to result in a 1.6-per-cent contraction in the final quarter.
Industry orders were also down in December, while both imports and exports shrunk during the month.
Source: Bahrain News Agency