German economy returns to growth

May 15, 2019: The German economy bounced back in the first quarter from a weak second half of 2018, official data showed Wednesday, with gross domestic product (GDP) adding 0.4 percent between January and March.

Europe's powerhouse had only narrowly avoided a technical recession -- two quarters of negative growth -- last year, federal statistics authority Destatis also confirmed, shrinking 0.2 percent in the third quarter and remaining flat in the fourth.

Over the full year in 2018, GDP expansion in Europe's largest economy slowed from the previous year's 2.2 percent to 1.4 percent, and 2019 presents new risks to growth.

Observers are concerned that Germany and the wider 19-nation Eurozone could suffer a sharp slowdown, with a resilient domestic economy and service sector but export-oriented industries weighed down by external trade conflicts.

Although an uneasy commercial truce for now remains in place between Brussels and Washington, knock-on effects from President Donald Trump's tariff showdown with China are making themselves felt in Europe.

The federal government in Berlin has repeatedly slashed its growth forecasts for 2019, in April predicting just 0.5 percent expansion.

Many think-tanks and organizations like the International Monetary Fund (IMF) have also cut expectations, although they remain less cautious than the economy ministry.

"Given the weakness of industrial performance and risks from overseas, caution will continue to dominate" views of the German economy, analyst Jens-Oliver Niklasch of LBBW bank commented.

"Nevertheless, the start gives hope that 2019 might not turn out as bad as the latest forecasts," he added.

(APP)