Our figure of the month 01/2019: Outlook 2019

GWS expects economic growth in Germany to range between 1.25% and 1.50%.

With 1.50 % of the price-adjusted domestic product, 2018 closed below the lower end of the forecast range of future economic development, which was published a year ago. This weaker development was caused by foreign policy developments and the associated high level of economic uncertainty. Net exports reduced price-adjusted economic growth by 0.2 percentage points. The year 2018 was marked primarily by the trade war between the USA and China, also the trade dispute between the USA and the EU also continued to smoulder. The chaos surrounding Britain's exit from the EU was also not conducive. But homemade problems in the automotive industry surrounding the new WLTP approval process also caused a noticeable drop in production in the fall of 2018. In addition, the unusually hot summer left its mark: the chemical industry had to reduce its production, for example due to low water levels in the Rhine.


The trade challenges of 2018 will continue to shape 2019. Should the current talks between the US and China lead to a defusing of the trade conflict, GDP development can be expected to be at the upper end. Successful negotiation of an industrial agreement between the US and the EU could also lead to a "TTIP-light", which would also send positive signals for German exports. However, both also have opposite development potential. The decision on the BREXIT will be taken at the end of March 2019 - whether it will be ordered, disordered, not at all or "postponed" is still completely open. The uncertainty remains.

Despite the external challenges, domestic development remains robust. Private demand will increase somewhat less strongly. However, there is still scope for investment and consumption on the part of the state due to the positive net financing balance. Private financing conditions also remain favorable. Some sectors, such as the automotive industry, are investing heavily to face the structural change towards a new drive technology, also in view of new CO2 targets from the EU. New production platforms and battery cell factories are being built. "Digital" investments will increase. Not least because production limits are increasingly being reached in some sectors due to a shortage of skilled workers.

The shortage of skilled workers is becoming a growing problem in Germany. In some regions, full employment has been achieved, training places remain vacant, vacancies are not matched by adequate applicants, the unemployment rate is at a historically low level and the number of Hartz IV households has fallen below three million for the first time. The federal government has now agreed on a law on the immigration of skilled workers. This means that immigrants from non-EU states will no longer be restricted to bottleneck occupations or to priority checks. This provides an opportunity to counteract the shortage on the labour market.

The year 2019 will be marked by trade policy, a shortage of skilled workers, automotive structural change and digitisation in a wide variety of forms. This year, GWS will once again be speaking about these topics in various projects, publications and at various conferences.

Although the forecast foresees a slowdown in economic growth, this is no reason to be pessimistic about the future. Rather, it requires close observation of economic change and courageous, forward-looking decisions on the part of the state and companies.

Other figures can be found here.

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