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Germany slumps in Q3, hopes for rebound
FRANKFURT AM MAIN, Nov 14, 2018 (BSS/AFP) – Germany, Europe’s largest
economy and top exporter, went into reverse in the third quarter, shrinking
0.2 percent after a gain of 0.5 percent in the previous three months,
official data showed Wednesday.
It was the first quarter-on-quarter fall in gross domestic product (GDP)
since early 2015, federal statistics authority Destatis said, and worse than
the 0.1-percent slip forecast by analysts.
“The slight fall in GDP was above all down to external trade
developments,” Destatis said in a statement, pointing to lower exports and
higher imports than in the second quarter.
Meanwhile at home there was higher government spending and private-sector
investment, but consumer spending fell.
Earlier indicators had hinted at a slowdown for Germany, with economists
highlighting in particular new European emissions tests weighing on the vital
car industry.
New car registrations plunged more than 30 percent year-on-year in
September as the so-called WLTP cycle was introduced.
The auto industry, Germany’s largest, employs around 800,000 people in
firms ranging from giants like Volkswagen, BMW or Mercedes-Benz maker Daimler
to tiny components suppliers.
“The decline in exports in Q3 looks to be in large parts due to the car
industry, just like the decline in the wider economy,” tweeted Oxford
Economics analyst Oliver Rakau.
“The real question is the size and speed of the bounce-back over the
coming quarters.”
ING Diba bank economist Carsten Brzeski pointed to “several one-off
factors, but also some more worrying structural developments” behind the
slump.
Trade tensions with the US under President Donald Trump and weakness in
emerging markets have weighed on export powerhouse Germany.
“Don’t underestimate the negative confidence effect from the World Cup,”
when Germany dropped out in the group stage, he added.
But “low interest rates, a weak euro and some fiscal stimulus… are
strong arguments in favour of a growth rebound in the coming quarters,”
Brzeski said.
BSS/AFP/HR/1425