Germany to grow much slower in 2019 - thinktank
By Abigail Townsend
Date: Thursday 14 Mar 2019
(Sharecast News) - Germany's economic growth forecasts have been sharply downgraded, as global demand for industrial goods weakens.
The Ifo Institute, the influential German think tank, has cut its forecast for 2019 to just 0.6% from an earlier estimate of 1.1%.
Timo Wollmershaeuser, head of business cycle analysis and forecast at the Ifo, said: "The current production difficulties in Germany manufacturing are likely to be overcome only gradually. The industry will largely fail to act as an economic engine in 2019. Global demand for German products is weak, as the international economy continues to lose momentum."
Germany's economy, the largest in the eurozone, has long relied on its manufacturing sector and a strong export market. But that is being undermined by a slowdown in the global economy, heightened trade wars and the threat of a disorderly Brexit.
Its car industry has also faltered, as it struggled to comply with the introduction of more stringent emission tests by the European Union and diesel cars fell out of fashion.
The Ifo did, however, adopt a more positive tone for the medium term, increasing its forecast for economic growth in 2020 to 1.8% from 1.6%, with the economy in part benefit from a continued rise in government spending.
Argued Wollmershaeuser: "This year, strong wage increases, a low inflation rate, reductions in taxes and social security contributions as well as an expansion of public transfers should result in a large increase in the real incomes of households.
"This will bolster private consumption and the construction industry."
Data published on Thursday by the Federal Statistical Office showed that Germany's annual inflation rate, which is measured by harmonized European Union standards, held steady at 1.7% in February.
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