German Market stagnates as eurozone growth reaches 7-year low

Daniel Fowler
February 16, 2020

Destatis announced the German preliminary GDP quarterly report on Friday that showed the economy to have weakened in the last quarter of 2019.

The eurozone suffered its weakest growth since the debt crisis at the end of past year with economists warning the coronavirus will inflict more pain on the bloc's stalling economy. German Q4 q/q GDP is forecast unchanged at just 0.1% and a miss will weigh further on the currency.

Gross domestic product (GDP) was flat quarter-on-quarter in October-December, federal statistics authority Destatis said, disappointing the agency's own expectations and those of analysts surveyed by Factset.

Germany's troubles are a central problem for the 19-nation eurozone and the European Central Bank, which is trying to stimulate flagging growth and inflation with negative interest rates and bond purchases with newly printed money.

In comparison to a year ago meanwhile, Eurozone GDP growth was pegged at 0.9% in the last quarter of 2019 following a pace of expansion of 1.2% for the previous quarter.

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Germany continues to be a manufacturing and export victor in the past several years but these regions have been slow. Another is structural change in industry, particularly the auto business, where companies must sink billions into developing electric cars and new services based on smartphone apps, both to meet regulatory pressure for lower greenhouse gas emissions and to head off competition from new entrants from the tech industry.

"At least for the first quarter, there are signs of a noticeable slowdown in the Chinese, and thus also the global economy as a effect of the coronavirus".

Economic growth in the Eurozone, as expected, slowed down at the end of 2019 by a decline in GDP of France and Italy and stagnation in Germany.

Ahead of the release, weak data for manufacturing orders and industrial production in December had raised fears that the economy had stagnated or even contracted in the fourth quarter.

Carsten Brzeski, chief economist at ING Germany, said recent hopes for a modest upswing were looking a little premature at this point.

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