Germany appears to be hovering close to a recession as the German government halved its 2019 growth projections to just 0.5% on Wednesday, though it still expects an economic rebound in 2020 of 1.5%.
The steep slowdown reflects the current nosedive in German exports which has had an adverse effect on an economy where one in five jobs depends on the export of manufactured goods. With Brexit and a trade dispute between China and the US both taking their toll on the markets, Germany’s economy is increasingly reliant on domestic demand to stay afloat.
Economy Minister Peter Altmaier said the new forecast is a wake-up call and called for measures to stimulate the economy, including lowering corporate tax rates, a measure that is staunchly opposed by the junior coalition partner, the Social Democrats. Germany’s industrial lobby (BDI) is, instead, proposing incentives for climate-friendly investment.
Meanwhile, Finance <inister Olaf Scholz, a Social Democrat, has proposed a government stimulus package to the tune of €1.27 billion and providing a bonus of €500,000 a year to companies investing in research and development.