German economy stagnates in sign of Europe’s woes

Economy

German economy records zero growth in fourth quarter

Germany's economy flatlined in the last three months of 2019 after a slowdown in spending and exports wiped out growth in Europe's largest economy. The figure underlines the challenge facing the eurozone.

The European Union's statistics office Eurostat said GDP in the 19 countries sharing the Euro expanded 0.1% quarter-on-quarter in the October-December period, as announced on January 31, for a 0.9% year-on-year gain - a downward revision from the previously estimated 1.0% growth.

The setback means the eurozone was expanding at its slowest pace since early 2013 when its economy was gripped by the sovereign debt crisis.

"The overall economic stagnation in the fourth quarter is already a small success", Dr. Fritzi Koehler-Geib, chief economist at KfW banking group told AFP news agency, adding that Germany would have to wait until spring to see signs of recovery.

Germany has been a manufacturing and export champion in recent years but those areas have been sluggish.

City forecasters have been forced to downgrade their eurozone forecasts as the coronavirus outbreak causes havoc in China and disrupts global supply chains.

Europe's engine room failed to grow on the quarter for the second time in a year while it was revealed last month that France and Italy's economies both contracted in the final three months of the year.

Joshua Mahony, senior market analyst at online trading firm IG, said: "The German economy has gone from being the bastion of eurozone growth to perhaps the greatest hinderance, with the industrial powerhouse continuing to suffer under the wrath of Donald Trump's combative approach to global trade".

"In general, the German economy remains stuck between solid private consumption and a paralyzed manufacturing sector", he said in a note.

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