Points clés -

Germany returns to growth

Domestic demand remains solid as the international outlook darkens.

15 mai 2019

Azad Zangana

Azad Zangana

Économiste senior européen et stratégiste

  • Germany’s economy grew by 0.4% in Q1, after zero growth in Q4 2018
  • Temporary disruptions, including changes to car emissions tests, have largely abated
  • Trade wars remain a major risk given Germany’s status as one of the world’s biggest exporters

The German economy rebounded in the first quarter of the year thanks to higher household spending and construction activity. According to the flash estimate released by Destatis, real GDP grew by 0.4% quarter on quarter, an increase from no growth in the fourth quarter of 2018, and -0.2% in the previous third quarter.

Germany’s economy has been buffeted by a number of headwinds in recent quarter. Changes to car emission testing following the Volkswagen scandal led to a Europe-wide backlog of testing and supply of new passenger vehicles.

In addition, a drought in Northern Europe caused the water level of the river Rhine to fall to the point where cargo could not be shipped in or out of key manufacturing hubs. These temporary disruptions have almost abated, enabling activity to rebound to more normal levels.

Looking ahead, while the domestic demand situation has stabilised, the outlook for external demand is darkening. The escalating trade war between the US and China is likely to continue to have hurt international trade and demand for German exports. Both exports and imports are reported to have risen in the first quarter, but the net position appears to have been neutral.

Should the US administration follow through on its threat of tariffs on EU car exports, then a full transatlantic trade war will ensue, generating a major downside risk for Germany as one of the biggest exporters in the world. Our forecast assumes the US will not go that far, but at the same time, we do not expect any meaningful rebound in external demand in the near future.

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.