ZCZC
BCN-30
GERMANY-ECONOMY-INDICATOR-GROWTH
German economy ‘in better shape’ than thought in Q4
FRANKFURT AM MAIN, Feb 22, 2019 (BSS/AFP) – The German economy is “in
better shape” than feared, analysts said Friday, after detailed data for the
fourth quarter of 2018 showed a dashboard with few red lights despite flat
growth.
Figures from federal statistics authority Destatis confirmed preliminary
readings of 0.0 percent expansion between October and December, adjusted for
price, seasonal and calendar effects.
“German economic growth has stalled,” the statisticians said in a
statement, with the flatline in the final three months of last year following
contraction of 0.2 percent between July and September.
That meant Europe’s powerhouse only just escaped a technical recession —
two successive quarters of negative growth — in the second half of 2018.
Nevertheless, “the German economy is in a better shape than its current
reputation,” economist Carsten Brzeski of ING Diba bank commented on the
release.
Private consumption, government spending and investments all picked up,
while both imports and exports grew at around the same pace, leaving the
country’s trade surplus almost flat.
“None of the traditional growth components” were negative, Brzeski noted,
arguing the data showed the massive car industry’s struggles to adapt to new
tougher emissions tests were the main culprit for the slowdown.
Stocks of newly-built cars had piled up in the second and third quarter,
he pointed out, before being finally delivered in the fourth after passing
the so-called WLTP process introduced in September.
“Inventories were a massive drag” on growth in the final three months,
Unicredit analysts agreed, calculating the effect slowed the economy by “a
whopping 0.6” percentage points.
“The temporary problems in the car industry mask solid fundamentals,”
Brzeski said.
“In a couple of months, the German economy should be able again to show
its true colours.”
BSS/AFP/HR/1410