Economy Minister Peter Altmaier acknowledged a slowdown in growth in recent months as he predicted economic expansion of around 1.5 to 1.6 percent, below his previous forecast of 1.8 percent. Analysts suggest the downturn has been sparked partly by an ongoing trade dispute between the United States and China and political uncertainty surrounding Brexit. Mr Altmaier told members of Germany’s foreign press association in Berlin: “Growth somewhat slowed in the past months as it did in many other countries. “For the year as a whole, we’ll have growth of around 1.5 percent to 1.6 percent.”
However, the government expects fortunes to reverse and the economic powerhouse to enter its 10th year of expansion in 2019, Mr Altmaier added.
In April, the German government had predicted economic growth of 2.3 percent for this year.
This forecast was downgraded in October to 1.8 percent.
Mr Altmaier called the rise of populism the biggest risk in Europe, pointing to violent street protests in France.
The minister also pointed blame to trade tensions, claiming they were also a threat.
Mr Altmaier said: “With concern, we see the trade conflict between the United States and China, and we hope that it will be solved.
“We also hope that the trade tensions between Europe and the US can also be solved.”
German exporters have also been dented by a more general slowdown of foreign demand.
A slump in car production was noted as having dragged down levels of exports, caused by new pollution tests that were introduced back in September.
The new WLTP emissions testing regime was brought into effect after the Volkswagen ‘dieselgate’ scandal, which saw millions of diesel motors fitted with “defeat devices” which could identify when they were being emissions tested.
It is believed the slump in the German auto sector was down to some car models not having timely approval for a new registration, forcing manufacturers to throttle production.
Last month it was revealed that the German economy has shrunk for the first time in three years, having last declined in the first quarter of 2015.
Gross domestic product (GDP) contracted in the third quarter compared to the previous quarter by 0.2 percent, according to the Federal Statistical Office.
A separate index showed investor morale in Germany fell in December to 7.2 from 15.6, according to Sentix data released this week.
Despite the gloomy forecast, economists are still maintaining the risk of recession remains low despite weaker economic growth.
The German Institute for Economic Research (DIW) expert Claus Michelsen said analysts should remain “confident” in Germany, while IfW expert Stefan Kooths expects a “recovery after the summer”.
DIW have downgraded their GDP forecast for this year, with growth expected at 1.5 percent instead of the 1.8 percent forecast three months ago.
In 2019, GDP is forecast to grow by 1.6 percent according to DIW, 1.8 percent according to IfW.
The researchers also expect this rate for 2020.