LONDON (ICIS)--Germany’s government has lowered its official GDP growth forecasts for 2018 and 2019, due to trade conditions and problems in country’s big auto sector, the economic affairs ministry said on Thursday.
The government now expects 1.8% GDP growth for both 2018 and 2019 – down from its previous growth forecasts of 2.3% in 2018 and 2.1% in 2019. Last year, GDP grew by 2.2%.
A weaker external and trade environment was one major reason that prompted the cuts, the ministry said.
Another reason were difficulties in Germany’s auto industry in implementing the “Worldwide Harmonised Light Vehicle Test Procedure (WLTP)”, a new global engine/fuel emissions and testing standard.
Those difficulties and delays “temporarily” affected auto production, sales and exports, the ministry said.
But despite the lower growth rates, Germany’s economy is still “on the upswing” and will enter the tenth year of recovery next year - the longest recovery period since 1966, economic affairs minister Peter Altmaier told media.
The domestic economy was strong and would remain “a pillar” to support growth, he said.
As for the growing protectionism and trade disputes, Altmaier said that Germany was pressing for a “swift implementation” of the recent statement by European Commission President Jean-Claude Juncker and US President Donald Trump to resolve the US-EU trade dispute.
“We have to reduce tariffs and abolish trade barriers, to the benefit of both the US and the EU,” Altmaier added.
German chemical producers group VCI has warned that the country's chemical industry growth already slowed in Q2, with stagnating sales and only a minimal increase in production.
However, the group maintained its forecast of 3.5% growth in chemical production in Germany in 2018.