The German economy in the third quarter of this year contracted for the first time since 2015 as global trade disputes swung the traditional export growth engine of Europe’s largest economy into reverse, raising concerns that a near-decade-long expansion is faltering.
GDP contracted 0.2 percent quarterly, the German Federal Statistical Office said yesterday.
That compared with a Reuters forecast for a contraction of 0.1 percent.
Compared with the same period last year, the economy grew 1.1 percent from July to September, calendar-adjusted data showed.
Analysts polled by Reuters had expected 1.3 percent growth.
“The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: Provisional calculations show there were fewer exports, but more imports in the third quarter than in the second,” the office said.
The third-quarter dip in GDP was the first time the economy has contracted since the first quarter of 2015.
The government had last month flagged a weaker third quarter, citing bottlenecks in the auto sector stemming from the introduction of new pollution standards as a factor.
“Germany doesn’t have an economic problem, but rather an auto sector problem. Due to the sluggish certification of cars, car production had to be noticeably reduced, with collateral damage for other sectors too,” said Andreas Scheuerle at DekaBank.
Yet, the Mannheim, Germany-based Center for European Economic Research on Tuesday said that investors do not expect the German economy to recover rapidly from a weak patch in the third quarter.
Concerns are growing in the German economy, which is in its ninth year of expansion, about the effects of global trade disputes and Britain’s departure from the EU.
In addition to angst about the effects of US President Donald Trump’s abrasive trade policy, German firms are concerned about instability at home, where German Chancellor Angela Merkel’s awkward “grand coalition” has come close to collapsing twice.
ING Groep NV economist Carsten Brzeski said that even though he expected the auto sector to rebound in the fourth quarter, the GDP figures for the July-September period were a “wake-up call that political stability and strong growth are by no means a given.”
“The poor export performance, despite a weak euro exchange rate, suggests that trade tensions and weaknesses in emerging markets could continue to weigh on Germany’s growth performance,” Brzeski said in a research note.
Last month, the Association of German Chambers of Industry and Commerce cut its growth forecast for this year from 2.2 percent to 1.8 percent and projected a slowdown to 1.7 percent next year as the economy faces mounting risks at home and abroad.
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