BERLIN (Reuters) - The German economy will probably expand moderately this year and likely achieve around 1 percent growth, the head of the ZEW economic institute said.
German companies are grappling with a cooling global economy and trade disputes triggered by U.S. President Donald Trump’s ‘America First’ policies. The risk that Britain leaves the European Union without a deal in March is another uncertainty.
The German economy stalled in the final quarter of last year, narrowly escaping recession as the fallout from global trade disputes and Brexit threaten to derail a decade-long expansion in Europe’s economic powerhouse.
Germany’s economy grew at its weakest rate in five years in 2018. Growth is forecast to shrink further to 1 percent this year, and the country faces a budget shortfall of around 25 billion euros by 2023.
“The most likely scenario is that there is moderate growth,” ZEW President Achim Wambach told Reuters. “The forecasts of around 1 percent growth for 2019 are realistic.”
“Order books are still well filled. But expectations are deteriorating,” he said, pointing to concerns about Britain’s forthcoming exit from the European Union and trade disputes.
“A hard Brexit doesn’t help anyone,” he added. “I think the negotiating parties see it that way too and will come to a solution.”
Wambach also welcomed movement in global trade disputes, with U.S. and Chinese officials due to meet for talks on Thursday and Friday in a push to de-escalate a tariff war ahead of a March 1 deadline for a deal.
“There are positive signals: Europe is negotiating with the United States, the United States is negotiating with China,” he said.
Reporting by Reinhard Becker and Paul Carrel; Editing by Michelle Martin