Germany CRISIS: German economy growth forecast SLASHED by almost HALF

The growth forecast for Germany has been lowered for the current year after a panel of advisers to the government warned of risks to the already slowing economy. The German Council of Economic Experts for Economic Research has announced it expects gross domestic product (GDP) to grow by only 0.8 percent in 2019, Focus Money reports. This is down from a plus of 1.5 percent which was expected in November. For 2020, GDP is expected by the German Council of Economic Experts to grow by 1.7 percent.

The downgrade of the growth forecast for 2019 has been linked to a slowdown in the overall economy, with a cooling in the chemical and auto sectors partly to blame.

Other risk factors that could impact finances include Brexit uncertainty, trade disputes and a sharper than expected slowdown in China, according to economic advisers.

Christoph Schmidt, one of the advisers, said: “The German economic boom is over but a recession is not currently expected due to the robust domestic economy.”

The latest economic growth downgrade comes after Germany’s Statistics Office said industrial output dropped 0.8 percent in January.

This is below market expectations for a 0.5 percent rise and includes data from the Economy Ministry which showed car production fell 9.2 percent in January.

The German economy skirted on the edge of recession territory at the end of last year following a string of weak data releases.

The nation narrowly avoided slipping into the red at the end of last year with latest figures from the Federal Statistics Office showing GDP remained unchanged in the final three months of 2018.

A recession is defined as two or more consecutive quarters of contraction, leaving investors keeping a watchful eye on the economy after it shrank 0.2 percent in the third quarter.

German saw output tumble in December for the fourth consecutive month, with data from the Federal Statistics Office revealing industrial output slumped 0.4 percent from November and 3.9 percent from the previous year.

While the nation’s manufacturing sector plunged into contraction territory in January, dropping to 49.7 points from 51.1 in January, according to the latest figures from IHS Markit.

But in more positive news for Germany, the jobless total fell far more than expected in February and retail sales surged in January.

The number of people out of work in Germany decreased by 21,000 to 2.236 million in February, while retail sales jumping by 3.3 percent on the month in January.

But business morale fell for the sixth straight month in February, according to a survey.

The Munich-based Ifo economic institute said its business climate index fell to 98.5, the lowest since December 2014 and lower than a consensus forecast of 99.0.

Additional reporting by Monia Pallenberg.

source: express.co.uk