German 2019 Growth Set To Show Sharp Slowdown

- Annual growth last year expected to fall to 0.6pct

- Hard number estimate for fourth-quarter 2019 unlikely

- Report due Wednesday at 09.00 GMT

 

Frankfurt, 14 January 2020 (LS NEWS) – Europe’s largest economy is expected to report the lowest growth rate since 2013 as the country’s manufacturing industry continues to struggle.

 

A survey of economists said annual growth will fall to 0.6pct, just over a third of the 1.5pct increase in 2018 and near the 0.5pct rate in 2012 and 2013.

 

In the past, the German statistics office Destatis has released a preliminary figure for the fourth quarter along with the first estimate of annual growth, but a spokesman said Tuesday there would be "no hard number" for  the final three months of last year.

 

Germany barely skirted a recession last year when quarterly growth in the three months to October eked out a gain of 0.1pct following a 0.1pct decline in the second quarter.

 

German factory orders remain a concern.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said Europe’s biggest economy continued to limp along at a quarterly rate of 0.1pct in the final three months of 2019 despite stronger-than-expected industrial orders in November. “The message from the hard data remains one of weak GDP growth in the fourth quarter.”

 

German factory orders in November fell 1.3pct on the month and were 6.5pct lower compared with the year-earlier period. Exports declined at a monthly rate of 2.2pct in November.

 

ING Chief German Economist Carsten Brzeski said German growth at the end of last year was still muted. “Consumption and construction should have kept the entire economy out of recession territory once again in the fourth quarter, but the former growth engine, manufacturing, is still stuttering.”

 

 

Ifo poll results are showing more optimism among German managers.

New year, new luck?

 

While the hard data is sending mixed signals about the German economy, recent survey results suggest the worst may be over.

 

Investor responses to this month’s Sentix survey produced the best expectations reading since January 2018, indicating optimism about the coming six months.

 

The ZEW thinktank’s December poll showed the best result in the forward-looking economic sentiment index in nearly two years, and last month’s Ifo survey of German managers recorded its fourth straight increase for expectations.

 

“The German economy is heading into the New Year with more confidence,” Ifo said.

 

Not everyone is buying reports of a German economic resurgence. “Business surveys, such as the composite PMI and Ifo business expectations index, are consistent with stagnation at best,” said Andrew Kenningham, chief Europe economist at Capital Economics. “Our GDP tracker, which pulls all the available data together, suggests that the German economy contracted by 0.1pct in the fourth quarter.”

 

--- Eric Culp

@EricCulpLS