The EU has cut Germany’s growth forecast for the second time this year, as tensions with trade and a slowdown in China data has hurt the European powerhouse.
According to the latest forecasts on the German economy by the European commission Germany is only expected to grow at a rate of 0.5% this year which is the second the second worst economy in terms of growth across the EU. The other country which has the worst growth forecast is Italy.
The reasons for this seem to be attributed to the slowing growth in China which has seen some lower then expected data released this week in comparison to forecasts. Another determining factor is the trade wars, the main one being between the US and China which is obviously having an effect on China’s economy and in turn having a ripple effect down to countries such as Germany who rely on their manufacturing sector heavily. Data from last month showed that German exports and Imports had dropped more than expected.
Although there is a current downbeat tone the EU tone wasn’t all subdued as they said that economic growth was expected to recover on the back of domestic demand and a gradual improvement in foreign demand.
Germany is the EU’s largest economy and bad news for them normally has an affect on the region as a whole but there seems to be no need for panic just yet.