German economy declines on global trade debate. For the first time since 2015, Germany’s economy shrank in the third quarter due to weaker trade position and problems in the auto industry.
Gross domestic product (GDP) in the third quarter dropped by 0.2 percent after growth of 0.5% in the second quarter, the Federal Statistics Office said on Wednesday. The figures indicate worse than expected results.
Germany’s weak foreign trade position, as well as falling exports and rising imports, was the main are the main causes behind the slowdown between July and September.
The statistics office noted that private consumption fell, while equipment investment and construction climbed. However, it didn’t mention the car industry.
Moreover, the Economy Ministry said that the country would see a hike in the fourth quarter as the contraction between July and September is a temporary phenomenon.
The ministry said: “The upturn was merely disrupted during the third quarter.” “Once these special effects have dissipated, the German economy’s upturn will continue.”
2018 export growth projection of Germany’s BDI industry association dropped 3 percent from 3.5 percent on Wednesday. He also said that German households spent less while, at the same time, firms invested more in equipment, construction, and machinery. Additionally, government spending was also elevated in the third quarter.
“Problems with the emission norms created severe production problems in the automotive industry, higher energy prices completely erased previous wage increases and also don’t underestimate the negative confidence effect from the World Cup,” said Carsten Brzeski, the chief economist based in Germany.