Economy - - Nov 15,2018
Germany's economy crashed hard in the third quarter, with prominent distress from car makers and strong tussles associated to trade rules weakening exports.
According to Federal Statistics Office, Europe's largest economy shriveled by 0.2% between the months July and September. These are the worst economic statistics registered by Germany in almost five-and-a-half years.
Economists suggest that the disappointing result was majorly caused due to temporary factors like the impact of WLTP emissions-testing protocol. It was noticed that demonstrating carmakers' struggled recently to adapt with the new standards, which led to production fallout of vehicles and parts by almost 7% during the third quarter.
The second major blow was delivered by the export slowdown, which manages a major share of Germany’s economy. The export statistics as compared to last year are quite low, since intensifying trade dispute between the U.S. and China has stifled foreign demand.
"The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: provisional calculations show there were fewer exports, but more imports in the third quarter than in the second," as reported by the Destatis office.
Stefan Schneider, economist at Deutsche Bank, said that the “headwinds in global trade” have turned uneven. However, he expects that the nation will surpass this stage to deliver 1.3% growth in 2019.
The expectations stated by government's council of economic experts are fixed at 1.6% growth this year in comparison to the previously anticipated mark of 2.3%. Also, for 2019, the growth predictions are believed to be 1.5%.