China Trade Slump Signals Late 2018 Was Rough for German Economy

(Bloomberg) -- Weak data from the other side of the world are diminishing the likelihood that Germany posted a rebound at the end of 2018.

Chinese imports from Europe’s largest economy dropped an annual 15.6 percent in December, the most in almost three years, signaling that one of Germany’s main pillars of demand is weakening. China is Germany’s largest trade partner outside the euro area, and economists at Commerzbank cited stabilizing momentum in the Asian country as a key reason why they predict a growth pick-up in the currency bloc in spring.

China Trade Slump Signals Late 2018 Was Rough for German Economy

While the figures don’t always match one-to-one with German export numbers, the releases tend to move in the same direction -- with Chinese data published nearly a month before German statistics. A trade dispute with the U.S. has amplified China’s economic headwinds, at a time when policy makers are already grappling with decelerating consumption, falling factory sentiment, and a worsening employment outlook.

In Germany, dismal industrial figures have pointed to the possibility of a second quarterly contraction of economic output at the end of 2018 that would push the country into a technical recession. More information about underlying growth momentum should become available on Tuesday, when the Federal Statistics Office releases full-year growth figures.

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