Europe's greatest economy

14 Feb 2020

Europe’s greatest economy barely grows by the end of 2019

In case you are not aware, Europe’s greatest economy is Germany. This is due to its highly developed social market economy. As we previously mentioned, it has the largest national economy in Europe, but that is not everything. Germany is also the fourth-largest by nominal GDP (gross domestic product) in the world. However, despite the impressive results of the German economy in the last years, the end of 2019 was not that good.

While in 2016, Germany recorded the highest trade surplus in the world worth $310 billion, making it the biggest capital exporter globally, the country’s economy had a very weak three months at the end of 2019. In 2017, the nation was (and still is) one of the largest exporters globally with $1448.17 billion worth of goods and services exported. Despite all of this, when we compare its GDP of 2018 and 2019, last year’s was higher by just 0.4%. As we mentioned in a previous post, this slow growth contributed to the unimpressive number of the Eurozone economy as well.

Europe greatest economy
Today, we discuss why Europe’s greatest economy is not growing that strong. (Source: Veja)

Why is Europe’s greatest economy not as strong as in 2018?

When it comes to economic expansion not considering the GDP, the German growth was reported at 0.0%, i.e., none. Specialists say that this is partly due to a decline in exports. If you do not know exactly what Germany exports, know that Europe’s greatest economy top 10 exports are:

  • vehicles,
  • machinery,
  • electronic products,
  • electrical equipment,
  • transport equipment,
  • basic metals.

However, the investment in machinery and equipment was not that great between October and December of 2019. If things continue to be that weak, the situation might be devastating for Germany. Actually, exporting matters more to the German industry that you would realize. The country is the third-largest exporter of goods after much larger economies, like the United States of America.

Besides, when President Donald Trump took office, Germany became very exposed to the tensions in international trade that have arisen. Remember that the politician established new tariffs on aluminum and steel and this affected Germany somehow. Moreover, we must still consider the trade war between the US and China. Since both countries matter to Germany, any damage they inflict on one another may affect the sales of German goods.

What we learn from the current situation is that despite the fact that German is Europe’s greatest economy, it is not totally independent. The German economy depends a lot on exports and when there is a trade war going on, it will not remain bulletproof.

Source: BBC