Our figure of the month 01/2020: Outlook 2020



At 0.50% of the price-adjusted domestic product, 2019 has performed significantly worse than forecast a year ago. This weaker development was primarily due to foreign policy developments and the high level of economic uncertainty that accompanied them.

As in 2018, the year 2019 was marked above all by the trade war between the USA and China. In the course of 2019, the trade conflict escalated further: by September 2019, the additional US punitive tariffs on Chinese goods totalled USD 250 billion. The other side paid additional customs duties on goods worth around USD 113 billion. It was not until December 2019 that the spiral was halted for the time being. With the partial agreement in the trade dispute, a further extension of the punitive tariffs on both sides could be avoided. The trade dispute between the US and the EU also continued to smoulder in 2019. The "meat deal" of July 2019 – in which the EU agreed to a purchase guarantee for American beef - did not solve the fundamental problem. Although punitive tariffs on EU cars have still not been imposed, punitive tariffs against France are being considered in response to the digital tax there. The US is also considering imposing punitive tariffs on Airbus in the conflict over aviation subsidies. The chaos surrounding the UK's withdrawal from the EU was also not conducive to economic growth in 2019. It was not until the parliamentary elections on 12th December that the UK's intentions to leave the EU became clear. However, it remains unclear how the economic relations between the EU and the UK will be regulated in detail.

The global uncertainties delayed investments and significantly decelerated the dynamics of incoming orders. The manufacturing sector in particular suffered from the global weakness in demand. Orders collapsed in many industrial sectors. The automotive industry has admittedly got a grip on the problems with the WLTP approval process again. Domestic registration figures were also good. However, the industry is under strong pressure to adapt.

Despite the developments outlined above, Germany was able to hold its own in 2018 in the turbulent times. A recession – two quarters of shrinking gross domestic product – was narrowly avoided. Domestic demand remained strong in the face of high wage increases and very low unemployment figures. Growth is also being supported by the continuing strength of the construction sector.

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