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German Institutes Slash 2019 Growth Forecast by More Than Half

German Institutes Slash 2019 Growth Forecast by More Than Half

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Germany’s economy will grow by less than half the rate previously expected this year, and risks to the outlook include global trade disputes and a disorderly Brexit, according to the nation’s five leading research institutes.

The gross domestic product of Europe’s largest economy will expand by 0.8 percent in 2019, the institutes predicted in their latest outlook published Thursday in Berlin. In September, they expected growth of 1.9 percent.

German Institutes Slash 2019 Growth Forecast by More Than Half

“The size of obstacles to domestic production and the scope of the slowdown in the global economy were underestimated,” the institutes wrote. The danger of a “pronounced recession” with several quarters of contraction is low as long as political risks do not intensify, they added.

Germany would be especially hard hit by an escalation of trade disputes and a disorderly Brexit as the U.S. and Britain are two of its most important trading partners, the institutes said. Uncertainty about the Chinese economy is also a risk factor.

The 2019 forecast is in line with a prediction made last month by Germany’s Council of Economic Experts.

The five institutes -- IWH (Halle), DIW (Berlin), Ifo (Munich), IfW (Kiel) and RWI (Essen) -- stuck to their German growth forecast for next year of 1.8 percent. Their report forms the basis of the government’s economic outlook, due to be updated on April 17.

--With assistance from Zoe Schneeweiss.

To contact the reporter on this story: Iain Rogers in Berlin at irogers11@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Chris Reiter

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