German economy

17 Jan 2020

German economy is slowing down. Understand why

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It is very important to pay attention to the German economy since it is known as the most powerful one in all of Europe. According to specialists, it grew by 0.6% last year. Despite its growth, it is the weakest performance since 2013. Many people have been stating that Germany can even say “goodbye” to its golden decade. Taking everything into consideration, is Germany being harmed?

Let us take a look at the current scenario. It has been reported by the German statistics office that growth was driven mainly by household spending. Despite that, business investment in machinery and equipment was weaker. When it comes to exports, they did grow, but more slowly than we observed before 2019. On the other hand, industrial production also fell by 0.5%, but only if you exclude construction.

German economy
Understand what is behind the slowest growth of the German economy (Source: Getty)

Even when it comes to the German economy, we must pay attention to US moves

We previously mentioned that Germany is a big exporter. Actually, it is the third-largest exporter country after the US and China. However, the levels of exportation did not grow exponentially as we would expect to, mostly when we consider a nation with such a force. It has been a persistent concern that the rising tensions in international trade might affect German potential. This has been in discussion since President Donald Trump took office. Actually, there are reasons to believe that it has hit Germany severely.

Although services and construction experienced growth, the industry is contracting at worrying levels for the German economy. The aforementioned statistics office even affirmed that the low output in the automotive industry was responsible for the decrease.

The good thing about being a worldwide power is that even when things are bad, the population does not seem to suffer from its effects that soon. Even in the middle of an economic crisis, the employment levels have continued to expand. This is not because the country is offering different types of jobs since the rate of new job creation has slowed. This is quite surprising, mostly considering that unemployment in Germany is among the lowest in the world.

If you like to know what is happening around the globe regarding the economy, do not forget to check our daily posts. Besides the German economy, we discuss pieces of information about personal finances, financial tips and opportunities for getting good credit cards and personal loans.

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Source: BBC

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