After Italy going into recession last month, all eyes were on the struggling German economy that saw a contraction in the third quarter of 2018. Financial reports have shown that German’s economy has stalled, not showing any growth.
Many in Germany and elsewhere will be happy that the biggest economy in Europe has not slid into recession. However, there is little to celebrate. Financial analysts were hoping that Germany would record a very modest 0.1% growth. The failure to achieve this is therefore still a concern for those interested in a prosperous German economy.
German Economic Woes
There are also massive concerns as Germany’s yearly economic growth was at its slowest rate for five years. There are warnings that Germany might not be out of the woods yet.
What is affecting the German market?
There are many factors that are affecting the German economy. Companies in the country have had to deal with a declining global economy and numerous trade disputes including those that have been instigated by U.S. President Donald Trump’s policies that place American goods first.
The economy has also been affected by the lack of technological investment in infrastructure within the country and delays with investments in transportation infrastructure. The German car industry has also been performing worse than expected.
No Deal Brexit
In addition to these concerns, there has been significant worry that the UK will leave the EU without a deal in March. This uncertainty will hit Germany the hardest. Germany sells significantly more to the UK than the UK sells to Germany.
Estimates from independent analysts think the difference in trade could be as much as £20 billion a year. Without a deal, all that incoming trade could be lost.
There are a lot of political uncertainties and low corporate confidence at the moment in Germany. Forecasters are thinking that the German economy could see even slower growth this year and that by 2023 the country could face a 25 billion euro shortfall in its budget.
If the German economy was to fall into a recession, then it could be a disaster for the rest of the euro-zone.