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Germany Just About Avoided a Recession Last Year, Says TS Lombard’s Singh

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Jul.26 — Shweta Singh, global macro managing director at TS Lombard, discusses Germany’s economy and manufacturing sector.

She speak son “Bloomberg Markets: European Open.”

What challenges does Germany need to address to ensure sustained and healthy economic growth in the future?

The German economy narrowly escaped recession in 2019, according to a report by TS Lombard’s Chief Economist, Shweta Singh. While the economy saw a slight quarter-on-quarter growth of 0.1% in Q4, the year overall saw a mere 0.6% growth in GDP.

The German economic slowdown can be attributed to several factors, including the US-China trade war, Brexit uncertainty, a slowdown in the Chinese economy, and a slump in the country’s key automotive sector. Singh notes that Germany’s reliance on exports has made it particularly vulnerable to external shocks.

However, Singh also suggests that the German government’s reluctance to implement fiscal stimulus measures to support economic growth has also played a role in the country’s sluggish performance. Unlike the governments of other major economies, such as the US and China, the German government has been hesitant to employ fiscal measures to boost infrastructure spending, instead opting for stricter budgetary policies.

Despite this, there are some positive signs for the German economy. The report notes that the country’s labor market remains robust, with unemployment at its lowest level in almost 30 years. There is also potential for growth in the renewable energy sector, as Germany has committed to phasing out nuclear power and coal.

Looking ahead, Singh suggests that the German economy may see a slight uptick in growth in 2020, provided there is a resolution to the US-China trade war and no further disruptions to global trade. However, she also notes that there are still several challenges that Germany must face, including the rise of automation and digitalization, which could mean the loss of jobs in traditionally strong sectors such as manufacturing.

The report concludes that, while Germany may have narrowly avoided recession in 2019, the country must address these challenges and embrace long-term structural reforms in order to ensure sustained and healthy economic growth in the future.