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Financial News: German GDP Flatlines In Q4

German GDP Flatlines In Q4

02/14/2020 - 06:16:00 (RTTNews)

(RTTNews) - The German economy stagnated in the fourth quarter of 2019 as slower consumption and weaker exports acted as a drag amid trade disputes and disruptions in the automobile sector, preliminary figures from Destatis showed on Friday.

Gross domestic product was unchanged from the previous quarter, confounding expectations for a growth of 0.1 percent. The third quarter growth was revised up to 0.2 percent from 0.1 percent.

Consequently, the economy grew 0.6 percent in the whole year of 2019 after a 1.5 percent expansion in the previous year. Thus, the flash estimate released in January was confirmed.

The latest pace of growth was the slowest since 2013, when the economy expanded 0.4 percent.

The economy grew for the tenth year in a row and Destatis had said this was the longest growth phase in unified Germany.

On a non-adjusted basis, GDP rose 0.3 percent year-on-year after a revised 1.1 percent expansion in the third quarter. Economists had forecast 0.2 percent growth.

On a working-day basis, the economy grew 0.4 percent year-on-year after a revised 0.6 percent increase in the previous quarter. Economists were looking for a 0.3 percent growth.

Data revealed mixed signals regarding domestic demand in the fourth quarter. While final consumption expenditure of both households and government slowed markedly from a strong third quarter, there was a diverged picture for fixed capital formation.

Investment in machinery and equipment was down considerably, fixed capital formation in construction and other fixed assets continued to increase.

Exports were slightly down in the fourth quarter, while imports of goods and services increased from the third quarter.

The bigger picture of the German economy is clear: it has been in a de facto stagnation since the summer of 2018, Carsten Brzeski, an ING economist, said.

"Some weeks ago, we had started to investigate which form the recovery could take from the alphabet soup of options," Brzeski added. Stagnation, with a risk of a technical recession, currently looks like the only dish served.

In the winter forecast, EU said Germany's real growth will rebound somewhat to 1.1 percent in 2020. The agency cited the outbreak of coronavirus as a key downside risk to the euro area.

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