The German economy grew by 0.6% in 2019, according to the Federal Statistical Office. This is much lower growth than the 1.5% in 2018 and 2.5% in 2017, but it meets market expectations. At the same time, this is the weakest increase in the German economy since 2013.

Consumer spending and the construction boom have continued to be a reliable pillar of the economy over the past year: thanks to its continued to be in good shape, the labor market and in 2019 the Germans were willing to shop. Construction also flourished, preventing the collapse of the German economy, which has been warned by some economists.

Specialists are unanimous on the reasons for the decline.

OECD’s Nicola Brand says:

“The decline in growth comes from trade disputes. Here, Germany, with its export-oriented industry, is under fire. Trade uncertainty remains. The big question is: How long will the domestic economy rise? If uncertainty is not extinguished, it can spill over into the local economy”, said Nicola Brandt, the head OECD Berlin Centre.

“The German economy grew by 0.6% last year, the weakest growth since the financial and economic crisis in 2012/2013. First, because weakness in international demand has hit the German industry with all its might”, commented Claus Michelsen of the German Institute for Economic Research (DIW). He explains that the local automotive industry is in recession – neighboring economic sectors are also affected by this weakness. “Real export hits in mechanical engineering were also much less sought after, because of the fact that demand for capital goods has suffered for a long time due to numerous unresolved political issues such as Brexit or the US-China trade dispute. The fact that the German economy has grown at all is due to strong private consumption and the construction industry”, added Claus Michelsen.

Europe’s largest economy has been growing steadily since the crisis year of 2009. With the exception of two weaker years, the gross domestic product grew sharply during this period, sometimes by more than 2% annually.

Most experts expect growth of about one percent in 2020. They explain part of the expected increase with the fact that there will be more business days this year.

However, in 2019 the German state managed to report a huge surplus – for the sixth consecutive year. The federal government, federal states, municipalities, and social security have collected a total of 49.8 billion EUR more than they spent, the Federal Statistical Office said. In 2018, there was a record surplus of over 62 billion EUR. The amount corresponds to 1.5% of gross domestic product.