Falling exports bring German economy to standstill in
fourth quarter
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[February 25, 2020] BERLIN
(Reuters) - Shrinking exports held back German economic activity in the
fourth quarter of last year, detailed data showed on Tuesday, confirming
that Europe's largest economy was stagnating even before the coronavirus
outbreak began.
Germany's export-dependent manufacturers are being hit by a slowing
world economy and increased business uncertainty linked to tariff
disputes and Britain's exit from the European Union.
The Federal Statistics Office said exports fell by 0.2% in the fourth
quarter from the third, which meant that net trade took off 0.6
percentage points from gross domestic product growth.
The trade outlook remains clouded as the coronavirus epidemic is adding
another risk, Ifo President Clemens Fuest said. The Ifo index for export
expectations fell in February, with car companies among the most
pessimistic, Fuest added.
Gross investment - which includes construction - rose by 2.9% in the
last quarter of the year, adding 0.6 percentage points to growth, the
statistics office said.
State consumption added 0.1 percentage points to growth while private
consumption, which has been a key pillar of support recently, made no
contribution.
The Statistics Office confirmed that the German economy grew by 0.6%
last year, the weakest expansion rate since the euro zone debt crisis in
2013.
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Containers are seen at a terminal in the port of Hamburg, Germany
November 14, 2019. REUTERS/Fabian Bimmer
For 2020, the government expects growth to pick up to 1.1%, helped mainly by a
higher number of working days in a leap year. Adjusted for calendar effects,
Berlin predicts 0.7% growth.
Andrew Kenningham, an analyst from Capital Economics, said the German economy
would continue to stagnate during the first half of this year as global demand
would remain weak and domestic investment was likely to drop.
The impact of the coronavirus on the German economy through disrupted supply
chains or lower demand from China had been small so far, Kenningham noted.
"But the longer the disruption in China continues, the greater the risks. And
the possibility of the virus spreading in Europe poses a new downside risk."
China is Germany's most important trading partner, with car makers being
especially dependent on both Chinese supply chains and demand from China.
(Writing by Madeline Chambers and Michael Nienaber; Editing by Michelle Martin)
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