German Economy Expected to Grow at the Slowest Pace in Six Years

(Bloomberg) -- German economic growth is set to weaken to the slowest pace in six years in 2019, held back by a deteriorating environment for global commerce hobbled by worries about trade disputes and Brexit.

After expanding 1.5 percent in 2018, Europe’s biggest economy will likely grow 1.0 percent this year, almost half the 1.8 percent pace forecast as recently as October and the weakest since 2013, the Economy Ministry said Wednesday. Nonetheless, a 10th consecutive year of expansion will see the unemployment rate decline to a record low of 4.9 percent and the ranks of the employed swell to an unprecedented 45.2 million people.

“That is the longest period of growth since 1966,” Economy Minister Peter Altmaier said in Berlin. “But headwinds, mainly from the external commercial environment, are increasing,” he added, referencing Brexit, trade disputes and international tax policy.

German Economy Expected to Grow at the Slowest Pace in Six Years

“There is great concern in industry that an unregulated Brexit, a hard Brexit, at the end of March could lead to significant economic upheaval between the U.K. and the rest of Europe,” Altmaier said at a news conference. The German government will do all it can to make sure Britain leaves the European Union with a deal, he added.

Altmaier said the 1.0 percent forecast is “a cautious one” because “it’s always better in the end when you are able to raise the forecast than if you have to cut it.”

Germany201720182019 forecast
GDP+2.2%+1.5%+1.0%
Employment+1.4%+1.3%+0.9%
Jobless rate5.7%5.2%4.9%
Domestic demand+2.0%+1.8%+1.4%
Exports+4.6%+2.4%+2.7%
Imports+4.8%+3.4%+4.0%

Altmaier said slowing growth should be a spur the government to improve Germany’s competitiveness by easing the tax burden on workers and companies.

©2019 Bloomberg L.P.