German economic growth slowed down sharply last year as a result of soft consumer spending and weakness in some of the external markets. Nevertheless, the largest Eurozone economy grew at a moderate pace in the last quarter of 2018, avoiding a technical recession, i.e. two quarterly declines in a row.
According to official data published recently, the largest European economy grew by 1.5% in 2018 compared to the previous year after the growth of 2.2% noticed in 2017. Therefore, slowest yearly growth has been noticed since 2013.
The slowdown of the German economic growth might cause weaker results of the rest European countries which supply components for the German automotive industry, as well as other goods.
German export-oriented companies work in growing risks conditions caused by uncertainty in the Brexit process as the UK is still in the process of leaving the European Union. Other risk factors are related to political instability in France due to mass protests, the United States’ protectionism and economic slowdown in China. The last circumstance causes lots of concerns because China is the largest trade partner for Germany, an important driver of German exporters’ profitability.
“German economy grows and declines together with China”, - Commerzbank economists Jorg Kramer said.
According to his words, a dangerous mix of risks has to be considered, such as high levels of Chinese companies’ debt and trade uncertainty related to the conflict with the United States. Germany is the third largest world’s exporter, therefore, the economic sentiment in the country is related to the general macroeconomic situation in the world. World Bank’s experts lowered the global economic growth forecast last week but the latest data showed even potentially sharper slowdown.