Germany to halve 2019 growth forecast - government source

Credit: Reuters Studio
Published on April 12, 2019 - Duration: 01:54s

Germany to halve 2019 growth forecast - government source

The German government is set to halve its 2019 growth forecast for Europe's biggest economy, a government source told Reuters on Friday, reflecting a worsening slowdown led by a recession in the manufacturing sector.

David Pollard reports.

Advertisement

Germany to halve 2019 growth forecast - government source

Europe's powerhouse Germany could be weakening faster than even its government thought.

In January, it downgraded its growth outlook to one per cent for this year.

Now, according to a source within the administration, it's about do mark it down again to just half a per cent.

The forecast comes next week.

And, if confirmed, would be another strand in a pattern of global softening.

As calibrated by the IMF and World Bank meetings in Washington this week.

(SOUNDBITE) (English) IMF MANAGING DIRECTOR, CHRISTINE LAGARDE, SAYING: "Our forecast for growth this year is 3.3 percent, going back up we hope in 2020 based on our forecast to 3.6 percent.

But we contend that we are at a delicate moment." Made delicate because of unresolved trade tensions, the threat of Britain crashing out of the EU.

And - for Germany - risks from within the euro zone itself.

(SOUNDBITE) (German) PRESIDENT OF GERMAN INSTITUTE FOR ECONOMIC RESEARCH (DIW), MARCEL FRATZSCHER, SAYING (on ITALY): "A deep recession in Italy would also hit Germany hard because Germany receives a lot of advances from Italy.

It is an important trade partner and I see this risk as bigger than a hard Brexit." The good news, the DIW says, is that Germany will pick up again later in the year.

Finance minister Olaf Scholz, speaking at the Washington meetings, told reporters private consumption and state spending would help.

As will plans for income tax cuts worth 10 billion euros a year.

But if they don't, and Germany worsens, it will pose an unenviable choice for the ECB.

After announcing a series of cheap loans or TLTROs, it may, sources say, even look at paying banks to pass through to the economy the cash they borrow.

Just months after ending a 2.6 trillion euro quantitative easing programme, the European Central Bank once again looking at ways to stimulate the economy.

You are here

Recent related videos from verified sources

Merkel Dismisses Speculation About Possible Move To Big EU Job 00:43
Credit: Wochit News - Published 1 week ago 

Trade battle hits China's retail - but German economy rebounds 01:54
Credit: Reuters - Business (Amazon FireT - Published 2 weeks ago 

Global economy: double puzzle from China trade, German industry 01:36
Credit: Reuters - Business (Amazon FireT - Published 3 weeks ago 

Global economy: China eases growth worries (but not Germany) 01:49
Credit: Reuters - Business (Amazon FireT - Published on April 17, 2019 

German institutes slash growth forecast as industry orders tumble 01:34
Credit: Reuters Studio - Published on April 4, 2019 

German retail, jobless data raises hopes for robust private consumption 01:47
Credit: Reuters Studio - Published on March 29, 2019 

You might like