Germany Manages Q4 Growth

There had been concerns that Germany, the biggest economy in the EU could head into a technical recession when Q4 2018 data became available. The German economy suffered a contraction of 0.2% in Q3 2018, so by definition, any further contraction would mark the start of a (probably shallow) recession. In the end, this scenario was avoided by the slimmest possible margin: the German economy stagnated in Q4, neither expanding or contracting, posting a growth figure of zero percent, but at least it avoided falling into a recession.

The stuttering of the German economy has largely been blamed on the slowing of the global economy, an effect exacerbated by the trade war the USA is conducting with other nations, most notably China. As a major exporting nation (second only to Japan) the German economy is exposed to anything which harms global trade. A second factor (playing into the first) is the continuing drag of the car manufacturing (and exporting) sector which continues to suffer fallout from the scandal over falsified pollution and fuel economy data centred on Volkswagen. The scandal has harmed domestic sales of vehicles with German consumers hesitant to invest in new vehicles whilst confusion about emission standards and actual performance levels persists.

An unusual geographical feature has also been blamed for hampering economic performance: low water levels in the river Rhine, which is a major artery for transporting some goods, has been blamed for delaying the transportation of some goods.

In general, analysts are Bullish about German economic prospects and expect to see a return to growth in Q1.

Unemployment in Germany stands at 3.3% whilst inflation is running at 1.4%. Germany is a member of the Eurozone so its central bank lending rate is set by the European Central Bank and is currently at zero.

Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.