The German government is set to halve its 2019 growth forecast, with anticipation for the economy to grow by 0.5 percent, according to sources who spoke to Reuters. This is lower than a recent estimate of 0.8 percent by Germany’s leading economic institutes. Germany has been dented in recent months by weaker demand for its exports, softer consumer spending and car sales being hit by new emissions standards. The economy ministry said gloom for manufacturers was likely to continue, with orders from abroad forecast to continue tumbling and growth only expected from the domestic market.
But solid services and construction sectors should more than compensate for the downturn in manufacturing in the first quarter, the economy ministry added.
Unresolved trade disputes, uncertainty linked to Brexit and a slowing global economy have hit foreign demand and hurt German manufacturers.
That has plunged the manufacturing sector into a contraction and prompted a slowdown in the broader economy, which has grown in each of the past nine years.
The government source said Economy Minister Peter Altmaier expects a growth rebound next year to 1.5 percent.
The economy ministry said in its monthly report: “The German economy is showing a mixed picture.
“Services and construction in particular remain in good shape.
“The industrial sector is going through a weak phase due to the slowing world economy.”
In the latest of a string of weak data released, disappointing trade activity revealed exports and imports fell more than expected in February.
The Federal Statistics Office said seasonally adjusted exports were down by 1.3 percent on the month.
This marks the biggest drop in 12 months, while imports fell 1.6 percent.
The trade surplus edged up to €18.7 billion (£16.1 billion) from a revised 18.6 billion euros the previous month.
While 2019 is currently forecast to be lacklustre for the German economy, leading economic institutes for the nation are predicting a strong increase in growth in 2020.
The report is predicting gross domestic product (GDP) for Germany to increase by 1.8 percent for next year.
Data released last weak showed German industrial orders fell by the biggest margin in more than two years in February.
However, industrial output rose slightly more than expected in the same month as mild weather helped a surge in construction.
Germany is in its tenth year of economic expansion, but narrowly skirted a recession at the end of last year and posted its weakest growth rate in five years in 2018.
The German government will update its growth forecast later this month.