Technical recession knocking at the door

QIII-2019 QUARTERLY REPORT GERMANY

Technical recession knocking at the door Global trade disputes braking growth

▪

The German economy is set to continue losing steam in the further course of the year. Uncertainty in the business sector remains high with the international trade disputes and the exit of the United Kingdom from the EU looming large.

▪

Real economic output this year will only grow a marginal 0.5 percent at most compared to the previous year. In the event of a no-deal Brexit at the end of October, growth could even slide down towards zero.

▪

Germany is increasingly heading for a technical recession. In the second quarter 2019, German gross domestic product decreased 0.1 percent over the previous quarter after price, calendar and seasonal adjustment, following a 0.4 percent increase in the first quarter. Another downturn in the third quarter would bring the German economy into a technical recession.

▪

Sharp drop in manufacturing output weakens growth. Manufacturing output fell for the third consecutive quarter. The 4.9 percent drop registered in the second quarter was its worst performance for ten years.

▪

Foreign trade pulls down overall economic growth for fourth quarter in a row. Exports failed to contribute to growth, dropping 0.8 percent in the second quarter year on year while imports increased 1.8 percent.

Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Content The German economy......................................................................................................................... 3 Technical recession increasingly on the cards...................................................................................... 3 Labour market: employment levels still rising, but so is unemployment ............................................... 6 Industry ................................................................................................................................................ 7 Incoming orders for industry declining for one year now ...................................................................... 7 Industrial production downward for over one year and with accelerating momentum .......................... 8 Business sentiment: signs of recession mount ................................................................................... 10 Capacity utilisation declines but still above average ........................................................................... 11 Outlook ............................................................................................................................................... 11 Likelihood of technical recession increases ........................................................................................ 11 Sources .............................................................................................................................................. 14 Imprint ................................................................................................................................................ 14

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

The German economy Technical recession increasingly on the cards The German economy is faltering. Real gross domestic product (GDP) decreased 0.1 percent in the second quarter 2019 compared to the previous quarter following price, calendar and seasonal adjustment, after recording relatively robust growth of 0.4 percent in the first quarter. Real economic output stagnated compared to the previous year. After calendar adjustment, GDP did still manage to increase by a marginal 0.4 percent. The economic environment has clouded over significantly since the strong start to the year.

Growth in real GDP in percent 4

3

2.5 2.2

2

1.5

1

0.5 (forecast)

0

-1 I

II

III

IV

I

2016

change over previous year quarter

II

III 2017

IV

I

II

III 2018

change over previous quarter

IV

I

II

III

IV

2019

change over previous year

Source: Federal Statistical Office

In the second quarter 2019, Germany’s economic output was generated by a workforce of 45.21 million. That is 435,000 people or one percent more than in the second quarter last year. Almost half of the new jobs were created in public services, education and healthcare (up 203,000 workers). There was also an above-average increase in jobs in the information and communication sector (up 3.1 percent) and in construction (up 1.6 percent). While the workforce employed by agriculture and forestry and financial and insurance services has been pointing down for several quarters already, it was the first quarter in ten years in which business services also registered a drop. The upward trend in the manufacturing sector has slowed down substantially (up 76,000 or one percent).

On the output side, gross value added increased in almost all sectors of the economy. The steepest rise was in the information and communication sector (up 3.3 percent), followed by the construction sector with an increase of 2.8 percent. Despite the declining workforce, real gross value added also increased in financial and insurance services, among business service providers, and in agriculture and forestry. Total gross value added was lower due to the sharp fall in the economic output of the

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

manufacturing sector. In the second quarter, output here decreased for the third consecutive quarter, going down by 4.9 percent, the biggest drop in ten years.

On the expenditure side of GDP, domestic activity in the second quarter 2019 remained above last year’s levels. Consumption expenditure increased by a total of 1.6 percent. Private households spent substantially more money on furniture and household goods, leisure, entertainment and culture. At the same time, they spent less on clothes and shoes in real terms. Overall, private consumption expenditure increased by 1.5 percent following price adjustment. State consumption expenditure even increased by as much as 1.9 percent, bringing the overall contribution of consumption to GDP growth to 1.1 percentage points.

Gross fixed capital formation increased by 2.1 percent in the second quarter year on year. The pace of growth in investment in plant and equipment (up 1.5 percent) and construction (up 2.2 percent) has nonetheless slowed down compared to one year ago. Investment in other assets increased by 2.7 percent. On account of new data, the last eight quarters have been considerably upwardly revised.

A sharp decrease in inventories reduced the contribution of gross fixed capital formation to growth from 0.4 to only 0.2 percentage points. All in all, domestic expenditure contributed 1.3 percentage points to growth. As at the start of the year, net exports did not contribute to growth. Exports dropped by 0.8 percent in the second quarter. Imports increased by 1.8 percent at the same time resulting in a negative contribution to growth of 1.1 percentage points. Net exports have now pulled down growth for four consecutive quarters.

Despite tariff dispute: moderate rise in trade with China and the United States In the second quarter 2019, German exports dropped 1.3 percent or 4.5 billion euros compared to the previous year, down to 330.2 billion euros (country-specific seasonally adjusted data not available).

This was the first time that exports have fallen since the third quarter 2016. The steepest drop by far was registered in exports to the United Kingdom, which plunged down 3.1 billion euros or 14.7 percent.

Exports to Denmark (down 1.48 billion euros or 23.9 percent) and Ireland (down 1.41 billion euros or 45.0 percent) also recorded hefty declines. However, in both of these cases, exports had risen unusually to the same degree the previous year. Exports to Singapore dropped by 771 million euros or 30.7 percent and those to Turkey by 525 million euros or 9.6 percent. The strongest growth in nominal terms was seen in exports to the United States, which increased by 1.4 billion euros or 5.1 percent.

Exports also grew robustly to countries inside the European Union, including Austria (up 589 million euros or 3.6 percent), Poland (up 539 million euros or 3.5 percent) and Belgium (up 362 million euros or 3.2 percent). Regarding trade with Asia, exports increased to China by 468 million euros or two percent and to Vietnam by 458 million euros or 63.7 percent.

In the second quarter 2019, imports increased again slightly. Compared to the same quarter last year, imports rose by 2.83 billion euros or one percent to 275 billion euros. The strongest growth in nominal terms was in imports from the Netherlands (1.34 billion euros or 5.7 percent) followed by Ireland (up 1.29 billion euros or 36.7 percent) and China with an increase of 804 million euros or 3.3 percent. The total volume of imported goods and services from Slovakia, the United States and Austria all increased by around 750 million euros. The strongest drops among imports were those from the United Kingdom (down 1.7 billion euros or 16.8 percent). Imports from Russia decreased by 1.5 billion euros or 17 percent, partly due to the downward trending prices for energy commodities. In trade with Italy,

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

imports from the country forfeited the large increases seen the previous year (down 1.44 billion euros or 7.8 percent). Imports from Turkey dropped for the fourth consecutive quarter, going down by 392 million euros or 9.4 percent.

German exports and imports in Q2 2019 in selected countries Year-on-year change increase (+) or decrease (-) in exports in million euros

increase (+) or decrease (-) in imports

in %

in million euros

USA

29 160

+ 1 403

+

5.1

Netherlands

Austria

16 881

+

589

+

3.6

Poland

16 098

+

539

+

China

23 694

+

468

Vietnam

1 177

+

Belgium

11 774

Switzerland

13 939

in %

24 950

+ 1 345

+

5.7

Ireland

4 817

+ 1 293

+ 36.7

3.5

China

24 826

+

804

+

+

2.0

Slovakia

4 510

+

754

+ 20.1

458

+

63.7

USA

17 174

+

753

+

4.6

+

362

+

3.2

Austria

11 574

+

740

+

6.8

+

349

+

2.6

Poland

14 102

+

599

+

4.4

France

16 938

+

448

+

2.7

South Africa

2 326

+

443

+ 23.5

Spain

9 050

+

324

+

3.7

Turkey

3 794

-

392

-

9.4

1 353

-

492

-

26.7

14 682

- 1 245

-

7.8

3.3

Iran

340

-

292

-

46.2

Italy

17 403

-

524

-

2.9

Turkey

4 945

-

526

-

9.6

Sweden

6 165

-

609

-

9.0

Singapore

1 741

-

771

-

30.7

Singapore

Ireland

1 727

- 1 411

-

45.0

Italy

Denmark

4 723

- 1 483

-

23.9

Russia

7 318

- 1 496

-

17.0

18 032

- 3 095

-

14.7

Great Britain

8 402

- 1 702

-

16.8

330 179

- 4 466

-

1.3

275 074

+ 2 832

+

1.0

Great Britain Total

Total

Sources: Federal Statistical Office, own calculations

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Labour market: employment levels still rising, but so is unemployment The economic downturn is also beginning to affect the labour market. According to preliminary data from the German Federal Statistical Office, the number of people in employment increased by 374,000 to 45.29 million in August 2019. This increase is much lower than the previous year when it was over 500,000. The increase in jobs subject to social security contributions has also slowed down markedly. According to the projections of the German Federal Employment Agency for June 2019 (latest available figure), the number of people in such employment was 33.39 million which is around 515,400 or 1.6 percent more than one year previously. The number of people in full employment subject to social security contributions increased by 239,000 or one percent over the previous year, with part-time employment subject to social security contributions increasing by 276,000 or three percent.

Other forms of employment decreased compared to one year previously. The number of self-employed including contributing family members went down by 62,000 or 1.7 percent to 4.17 million in the second quarter of 2019. The number of people exclusively in marginal employment also dropped, going down by 93,000 or two percent to 4.65 million in June according to preliminary figures from the Federal Employment Agency. Although the number of unemployed individuals dropped by 194,000 or 1.6 percent to 2.319 million in August 2019, seasonally adjusted, the figures for the last four months have trended upwards. The unemployment rate as calculated by the Federal Employment Agency was at 5.1 percent, or three percent according to the ILO definition.

German labour market* 34

4

33

Unemployed persons (right axis) 3

32 31

2

30

Employed persons covered by social security (left axis) 1

29 28 2012

2013

2014

2015

2016

2017

201

2 0 2019

Veränderung Beschäftigten zum…

Difference inder thesozialversicherungspflichtig number of workers making social security contributions from the same month last year (right axis)

*seasonally adjusted in million Source: Federal Employment Agency

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Industry Incoming orders for industry declining for one year now In June 2019, incoming orders for German industry increased by 2.5 percent over the previous month after price, seasonal and calendar adjustment according to preliminary data. Following a slight upward adjustment, the drop registered in May was two percent. The increase in new orders was primarily caused by a strong rise in demand from third countries, which, bolstered by large orders, climbed 8.6 percent. Incoming orders within the euro area decreased by 0.6 percent over the previous month, domestic orders by one percent. Excluding large orders, incoming orders dropped by 0.4 percent in June.

New orders, manufacturing 114

10

112

8

110

6

108

4

106 2 0.4

104

0 102 -1.1

-1.0

100

-2 -4

98

-4.2 -6

96 94

-8 2016

2017

2018

2019

Change over previous year, two-month-average, in percent (right axis) Volume index in manufacturing, two-month-average, seasonally adjusted (left axis) Change over previous quarter (q-o-q), in percent Source: Federal Statistical Office

With the data available for June, the second quarter results for 2019 are now complete and show a one percent reduction in incoming orders compared to the previous quarter, following a drop of 4.2 percent in the first quarter. Triggering this downward trend are orders from within Germany, which have been falling for three quarters now, going down 4.1 percent in the second quarter. Orders from abroad increased by a total of 1.3 percent, buoyed, above all, by demand from third countries (up 4.4 percent). Demand from the euro area, however, was down by 3.5 percent.

Among the main groups of industrial goods, producers of intermediate goods recorded 2.3 percent less incoming orders in the second quarter than in the previous quarter. While demand from abroad was only 1.1 percent down, demand from at home fell more steeply, going down by 3.5 percent. The drop year on year was large, at nine percent, and also the fourth in a row.

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Demand for capital goods in the second quarter 2019 was down by only 0.6 percent compared to the previous quarter. Rising foreign demand kept the downward trend from becoming more pronounced, although orders from domestic companies, at minus five percent, slid further than they have in the past eight years. Capital goods companies have now received less new orders year on year for the last four quarters. The latest drop was four percent.

Consumption goods producers received more orders in the second quarter than in the previous quarter, with orders increasing by 2.5 percent. While demand from within Germany dropped 1.8 percent, orders from abroad registered a robust increase of 5.6 percent. Year on year, orders were nonetheless down by 3.4 percent.

Incoming orders for German industry started flagging for the first time at the turn of the year 2017/2018.

The level of new orders was still high though and trended sideways from the middle of 2018. Overall, new orders stayed at the previous year’s level. While domestic demand was weak throughout the year in 2018, this was compensated by relatively strong demand from abroad. But foreign demand has also started to slip since the beginning of 2019. Incoming orders from all fronts are now falling, with high single-digit drops bringing figures down to 2016 levels. The downtrend in demand over the last four quarters is likely to translate into substantially weaker production data in the further course of the year.

Industrial production downward for over one year and with accelerating momentum Output in the production sector decreased by 1.5 percent in June 2019 compared to the previous month after price, calendar and seasonal adjustment, following a minimal increase of 0.1 percent in May. Energy production saw its fifth month of decline, this time by 1.6 percent. Mainstream construction increased by 3.3 percent, with the whole building sector only expanding by a marginal 0.3 percent. Industry decreased production by 1.8 percent in June compared to the previous month.

Production development in the manufacturing industry year on year change in percent 2017 2018 2019 year Q4 Q1 Q2 original value calendar adjusted

compared to previous period in percent 2018 2019 Q4 Q1 Q2 Apr May Jun seasonally and calendar adjusted

Production

2.7

0.9

-2.0

-1.6

-4.2

-1.1

-0.3

-1.9

-2.0

0.1

-1.5

Industry

2.9

1.1

-2.2

-2.6

-5.1

-1.2

-0.7

-1.8

-2.2

0.8

-1.8

Intermediate goods

3.5

0.6

-2.6

-1.4

-4.1

-0.8

0.0

-2.3

-1.5

-0.6

-2.0

Capital goods

2.9

0.9

-1.8

-3.2

-5.6

0.3

-1.7

-1.7

-3.4

2.0

-1.8

Consumer goods

1.9

2.9

-2.1

-3.4

-5.4

-6.0

0.2

-0.3

-0.5

0.6

-1.4

Energy

-0.1

-1.5

-4.6

-2.9

-7.3

-3.6

0.5

-5.9

-2.9

-1.7

-1.6

Construction industry

2.3

0.2

-0.1

6.2

1.6

0.7

1.6

-1.1

-0.2

-2.9

0.3

Construction industry proper

5.2

7.7

7.2

11.9

4.6

0.1

3.9

0.4

-1.6

-2.2

3.3

Sources: Federal Statistical Office, own calculations

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

The decrease affected all main industrial groups. Producers of intermediate goods recorded the biggest drop, going down by two percent. Capital goods producers cut their output by only slightly less, at minus 1.8 percent. Even consumer goods producers produced 1.4 percent less.

Results for the second quarter 2019 are therefore as follows: manufacturing output overall was down by 1.8 percent compared to the previous quarter following seasonal and calendar adjustment. That is the biggest drop to be recorded here in more than six years. In the first quarter, production only dropped by 0.7 percent. The decrease in production in the second quarter 2019 was 5.1 percent year on year, following a drop of 2.6 percent in the first quarter. This is the fourth consecutive quarter in which industrial production has decreased.

Production, manufacturing 110

8

108

6

106

4

104

2

102

0

100

-1.4

-1.2

-0.7 -1.8

98

-2 -4

96

-6 2016

2017

2018

2019

Change over previous year, two-month-comparison, in percent (right axis) Volume index in manufacturing, two-month-average, seasonally adjusted (left axis) Change over previous quarter (q-o-q), in percent Source: Federal Statistical Office

Among the main groups of industrial goods, the producers of intermediate goods registered the steepest drops in production. After seasonal and calendar adjustment, production decreased by 2.3 percent compared to the previous quarter. Year on year, production was down by 4.1 percent. This was also the fourth consecutive quarterly decrease. Producers of capital goods curbed their production by 1.7 percent in each case in the first two quarters 2019 following seasonal and calendar adjustment. The drop was much more pronounced year on year, at 5.6 percent. This is the fourth quarter in a row that capital goods production has been below the previous year’s level. The production of consumer goods dropped only marginally in the second quarter following seasonal and calendar adjustment, dipping only 0.3 percent following an increase of 0.2 percent in the first quarter.

Year on year, the downward trend set in slightly later but has clearly gathered pace, with the latest figures showing a drop of 5.4 percent for the second quarter 2019.

The hoped-for countertrend following the economic dent in the second half of 2018, purportedly caused by one-off effects, has failed to materialise. Instead of making up for lost ground, industrial activity has been pointing down for four quarters now without an end in sight. The result for the first six months of

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

the year so far is disappointing, revealing a decrease in production of 4.5 percent compared to the same period last year. Production is set to slow down further in the second half of the year with incoming orders for industry continuing to drop and sentiment indicators (ifo business climate index; purchasing managers’ index) also pointing down.

Business sentiment: signs of recession mount In August 2019, the ifo business climate index for Germany dropped for the fifth consecutive time, down to its lowest level since November 2012. Companies were less satisfied with their current situation. Most companies were also sceptical about the future. Among the individual sectors, business sentiment among service providers deteriorated considerably, above all on account of a more negative rating of the current situation. Prospects have also clouded over slightly. In wholesale and retail, the business climate index dropped into negative territory for the first time. Both the current situation and prospects were given a poorer rating. Wholesale was particularly pessimistic. The negative trend even extended to the construction industry. In this sector, the business climate index fell slightly as construction companies were somewhat less satisfied with their current situation. They remained as optimistic as previously that business would continue to be buoyant in the next six months. The business climate index for manufacturing has remained in negative territory for the last two months and is now lower than it has been for the past ten years. Both components, current business situation and upcoming prospects, sank further in August although the drop was less pronounced than the previous month. While still rated by most companies as positive, this was the fifteenth consecutive drop in the assessment of current business. Export prospects for industry improved slightly in August 2019, although still rated by the majority of companies as negative for the last three months. The ifo economic barometer is slowly but steadily falling into the quadrant of recession.

ifo Business-Cycle Clock German manufacturing* Boom

Business expectations for the next six month

Upswing 25 Jan 2014

Jan 2011

Jan 2018

15 Jan 2017

Jan 2010 5

Jan 2016

-5

Jan 2013

Jan 2015 Jan 2012 Jan 2019

-15

-25

August 2019

Recession -30

-20

-10

* Balances seasonally adjusted

0

10

Downswing 20

30

40

50

60

Assesment of current business situation

Source: ifo Institut

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Capacity utilisation declines but still above average The downtrend in industrial production since the middle of 2018 has led to a substantial decrease in the utilisation of production capacities. The capacity utilisation rate of industry dropped for the fourth quarter in a row, by a total of 3.8 percentage points down to 83.9 percent. Capacity utilisation is now only marginally higher than the average of the last ten years. The capacity utilisation rate for manufacturing excluding food in the same period dropped slightly further (by 4.1 percentage points) bringing it below the average of the last ten years for the first time since 2013. In comparison to previous periods of contraction, the current downturn in capacity utilisation is slightly steeper than during the euro crisis in 2011 and 2012 but weaker than in the downswings of 2001/2002 and 2008/2009. In contrast to past periods of downturn, the order backlog of industry calculated by the ifo Institute hardly changed, remaining at an average of 3.3 production months.

Outlook Likelihood of technical recession increases Following a strong start to the year, economic activity slowed down in the second quarter. Another drop in GDP in the current third quarter would bring the German economy into a technical recession. In view of the development of the economy in the first half of the year and the increase in global economic risks, we no longer rule out this possibility. We therefore need to revise our growth forecast of spring 2019.

The forecasts for domestic components only need to be adjusted slightly. We still expect consumption expenditure to increase in real terms by 1.5 percent this year. Private consumption continues to be buoyed by the labour market which remains stable. Despite increasing uncertainties, the number of jobs subject to social security contributions continues to rise, although less sharply than last year. The nominal wage increases agreed in some industries were above the inflation rate and should therefore also animate private consumption. The loss of purchasing power resulting from the slightly weaker euro should be more than compensated for by the lower commodity and oil prices. The latest figures for consumer sentiment as measured by the research institute GfK remain stable at a high level. While economic expectations of consumers deteriorated, their willingness to make larger purchases increased. The income prospects of consumers only dropped slightly according to the most recent data.

Domestic demand overall remains an important pillar for the rather weak current economic environment. The slight downward revision in our forecast for the consumption expenditure of private households for the coming year, down to 1.4 percent, is based on the performance in the first half of the year which was weaker than expected. According to figures from the Federal Statistical Office, state consumption increased in real terms by 1.9 percent in the first half of the year, substantially higher than we expected. For the second half of the year we expect public consumption to remain on this course, so we now anticipate state consumption expenditure to increase in real terms by 1.8 percent.

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Despite the economic slowdown, triggered above all by foreign trade, investment activity was still slightly up in the first half of the year. We had already factored in lower momentum than in the past two years. We therefore stick to our forecast increase in investment in plant and equipment of 2.5 percent. This is around about the level of growth seen this year so far. Investments that are now being made are probably based on longer-term investment plans in any case. Furthermore, capacity utilisation is still average for industry despite declining output. We still expect construction investment to grow by 3.5 percent in real terms. Particularly mainstream construction recorded robust growth in the first half of the year with investment in non-residential construction increasing steeply. The high need for residential housing and corresponding demand should see investment in residential construction continue to rise. Growth prospects for finishing works are likely to be limited by the shortage of labour.

In view of the new data for investment in other assets (software, research and development) for the last four quarters, we have revised our growth forecast here to three percent. These forecasts would lead to an increase in gross fixed capital formation of three percent.

BDI forecast for 2018/19: Change in real economic output over previous year in percent

2019

Federal Government 2019

European Commission 2019

1.4

0.5

0.5

0.5

1.1

1.5

-

-

- Private Consumption

1.1

1.4

1.2

1.1

- Public Consumption

1.0

1.8

2.0

2.0

2.6

3.1

2.2

2.3

- Machinery and Equipment

4.2

2.5

2.0

2.1

- Construction

2.4

3.5

2.7

-

- Other

0.4

3.0

1.4

-

Exports

2.0

0.5

2.0

1.1

Imports

3.3

2.8

3.8

2.9

Net Exports, Economic Output

-0.4

-0.9

-0.6

-0.6

Actual figures 2018 GDP, real Consumption

Investment

BDI

Sources: Federal Statistical Office, Federal Government (April 2019) European Commission (May 2019), own calculations

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Exports have been much weaker in the first half of the year than we anticipated in spring, curbed by the slowdown in the growth of global trade triggered in part by the escalation of the trade dispute between China and the United States. We now expect global trade to increase much less than previously anticipated (BDI 2019), with an increase in real exports of only 0.5 percent. In the event of a nodeal Brexit we expect real exports to drop a lot more. We still anticipate imports to increase by 2.8 percent, thanks to the stable domestic economic environment. Net exports would then bring down growth by 0.9 percentage points. All in all, we now expect real economic output to increase by only 0.5 percent this year compared to last year.

Germany: Exports according to region of destination 12

remaining countries Asia

10

USA non Euro area Euro area

8

6

4

2

0

-2

-4 2014

2015

2016

2017

2018

2019

Index: two-month average, after calendar and seasonal adjustments, in percent, year on year Sources: Macrobond, Deutsche Bundesbank

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Sources BDI (2019). Global Growth Outlook. Shock treatment | US protectionism and Brexit increasing risk of recession. 27 August. Berlin.

Imprint Bundesverband der Deutschen Industrie e.V. (BDI) Breite Straße 29 10178 Berlin T: +49 30 2028-0 www.bdi.eu Author Thomas Hüne T: +49 30 2028-1592 t.huene@bdi.eu Editorial / Graphics Dr. Klaus Günter Deutsch T: +49 30 2028-1591 k.deutsch@bdi.eu Marta Gancarek T: +49 30 2028-1588 m.gancarek@bdi.eu

This Quarterly Report Germany is a translation based on „Quartalsbericht III / 2019“ as of 7 September 2019.

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Technical recession knocking at the door | Global trade disputes braking growth 16/09/2019

Basic data for national account GDP (price, seasonally and calendar adjusted) Change over previous period in percent 2018 2017

2019

2018

Q1

Q2

Q3

Q4

Q1

Q2

1.7

1.1

0.1

0.3

0.1

0.4

0.8

0.2

- Private Consumption

1.8

1.1

0.1

0.2

0.0

0.4

0.8

0.1

- Public Consumption

1.6

1.0

0.0

0.6

0.1

0.4

0.8

0.5

2.9

2.6

0.9

1.0

0.7

0.9

1.6

-0.1

- Machinery and Equipment

3.7

4.2

2.0

0.4

0.5

0.3

1.4

0.6

- Construction

2.9

2.4

0.5

1.3

0.7

1.2

2.5

-1.0

- Other

1.3

0.4

0.2

1.3

1.1

1.2

-0.6

1.0

Domestic Demand

2.0

1.9

0.2

0.8

0.7

0.4

-0.1

0.5

Exports

4.6

2.0

-0.3

0.6

-0.6

0.2

1.8

-1.3

Imports

4.8

3.3

-0.4

1.6

1.1

0.7

0.9

-0.3

Total

2.2

1.4

0.1

0.4

-0.1

0.2

0.4

-0.1

Consumption

Investment

Contribution to growth (in percentage points) Consumption

1.2

0.8

0.1

0.2

0.0

0.3

0.6

0.2

- Private Consumption

0.9

0.6

0.0

0.1

0.0

0.2

0.4

0.1

- Public Consumption

0.3

0.2

0.0

0.1

0.0

0.1

0.2

0.1

0.6

0.5

0.2

0.2

0.2

0.2

0.3

0.0

- Machinery and Equipment

0.2

0.3

0.1

0.0

0.0

0.0

0.1

0.0

- Construction

0.3

0.2

0.1

0.1

0.1

0.1

0.3

-0.1

- Other

0.1

0.0

0.0

0.1

0.0

0.1

0.0

0.0

Change in stocks

0.1

0.6

-0.1

0.3

0.4

-0.1

-1.0

0.3

Domestic Demand

1.9

1.8

0.2

0.7

0.6

0.4

-0.1

0.5

Net exports

0.3

-0.4

0.0

-0.4

-0.7

-0.2

0.5

-0.5

Investment

Source: Destatis

15