BERLIN: The German economy likely expanded moderately in the third quarter despite the sense of uncertainty created by Britain’s vote to leave the European Union.
This uncertainty has now been added to by Donald Trump’s victory in the US presidential election, the Economy Ministry said today. “Overall economic output is expected to have increased slightly in the third quarter,” the ministry said in its monthly report.
Industrial output steadied in the three months to September, the labour market remains robust and private consumption continues to support growth in Europe’s largest economy, which should help to cushion against external shocks, it said. Brexit and the unexpected victory of protectionist Trump have jolted politicians, business leaders and markets in Germany and elsewhere around the world.
The US is Germany’s most important export market, accounting for roughly 10% of its sales abroad. In 2015, German companies sold goods worth €114 billion euros to the US, mainly vehicles, machines and chemical products. Germany’s Ifo institute estimates that more than 1 million jobs in Germany are linked to those exports that could shrink if Trump acts on his protectionist words.
“The global economic environment remains characterised by uncertainty following the Brexit decision and the US election,” the Economy Ministry said. “However, no negative impact is expected in the short term,” it added.
Recent economic data has painted a mixed picture of the German economy. While factory orders dropped unexpectedly and industrial output fell more than forecast in September, sentiment surveys have shown a more rosy outlook
Suggesting initial concerns about the impact of the Brexit vote may have been overdone, morale among company executives hit its highest level in two and a half years in October, according to the latest Ifo business climate index.
Last week’s purchasing managers survey showed the private sector expanded at its second-fastest monthly rate this year in October.
Germany’s economy grew 0.7% in the first quarter and 0.4% in the second, helped by higher household spending and increased state expenditure on migrants and infrastructure.
