Germany's economy could experience a"significant cooling" in 2019 and could see sharply lower growth this year, the country's leading economic institutes have warned in a report compiled for Germany's economics ministry.
"The long-term upswing of the German economy has come to an end," Oliver Holtemöller, head of the Department of Macroeconomics and vice president of the Halle Institute for Economic Research , which coordinated this spring's report. However, the institutes noted that, so far, they consider the chance of a pronounced recession with negative rates of change to gross domestic product over several quarters to be slight – at least as long as the political risks do not intensify further.
Earlier this week on Monday, Germany's manufacturing PMI fell to its lowest level since July 2012 signalling faster decreases in output, new orders and export sales, IHS Markt and BME, which compile the data, said, although services PMI data released Wednesday was more optimistic, with services business activity at a six-month high .
"Still, a slower rate of expansion had already become apparent due to production bottlenecks; the proportion of companies reporting production obstacles due to supply bottlenecks and a shortage of skilled workers had reached historic highs by the middle of last year." the report added. Noting that the low GDP growth in 2019 is due to the weak momentum at the turn of the year, the report said that the economic outlook is not as bleak as the 0.8 percent growth rate might suggest.