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The German Economy Suffers Weakest Growth Since 2013

The latest figures from the Federal Statistical Office (Destatis) in Germany show the country’s lowest growth rate since 2013. A set of mixed results give the overall impression of an economy that is struggling to expand, despite this being the tenth consecutive year of growth.

A Look at the Numbers

Growth in the German economy was limited to just 0.6% in 2019. This GDP has reduced from 1.5% in 2018, with 2.2% expansion having been recorded before that in 2017. Household spending was the main driver for the growth seen here. On the other hand, the industrial production sector, which excludes construction work, was down by 0.5%.

Another area that fell was business investment in machinery and equipment. Export numbers were slightly up, but with lower levels of expansion than had been seen in the last few years. The published report doesn’t include the full set of data for the final quarter of 2019. However, the national statistics office was able to assess the full year based on the information that it holds. 

The last quarters of 2019 were especially weak. It is thought that the 4th quarter had a growth rate of just 0.1% or 0.2%. This followed on from poor numbers in the 3rd quarter and a drop in economic activity in the 2nd quarter.

What about the Car Industry?

One of the mainstays of the Germany economy is its car manufacturing industry. Indeed, this European giant is the third biggest exporter of cars in the world, after the US and China.

One of the major concerns in recent times has been how badly affected they will be in the long-standing international trade wars. This has caused tension around the planet and encouraged many businesses to research collection agency fees in order to recover money. 

These latest figures show that exports grew, but at a very modest rate of just 0.9%. The official comment from the statistics office mentions “especially low output in the automotive industry” as being part of the reason that industry contracted.

Is Germany About to Enter a Recession?

These numbers show us that Germany just managed to avoid entering into recession last year. This is because it narrowly avoided posting numbers indicating a contracting economy in two successive quarters of 2019. Analysts will be eager to see if the sluggish trend continues into 2020.

It is clear that the economy here is struggling to grow, though. As it is Europe’s largest economy, any downturn here will have repercussions across the continent and further afield.  While industry contracted, growth was seen elsewhere. The services sector grew and construction was a particularly strong contributor to the overall numbers.

In terms of the economic activity per person in the country, this registered as a tiny 0.1% increase. If we look at the output in terms of each person employed in the German economy, it dropped by 0.3%. 

There are still jobs in the country, with employment rates continuing to grow. However, this growth is weak and the rate at which new employment is created has suffered a drop. At 3.1%, their unemployment rate is among the lowest on the planet.