International trade dispute

Author: Marcus Schilling
Date: 01.08.2019

German growth would be halved

If the trade dispute with the USA continues to escalate, the German government expects the German economy to lose a total of 0.3 percentage points in growth. This would be more than half of the expected growth for this year.

According to the ministry of economics, the 25 percent US fine on European cars would reduce the gross value added of the German automotive industry by seven billion euros in the longer term. This would correspond to 0.2 percent of German GDP. A further 0.1 percent growth would result if the US-Chinese trade dispute continues to escalate.

The German economy continues to cool down. According to the government’s forecast, it would grow by only 0.5 percent compared to the previous year in the further course of the year. Nevertheless, growth is expected to continue in the coming year.

Fabio de Masi, politician on the left, comments: “The federal government is talking down the effects of US punitive tariffs on cars.” If one includes the suppliers, about eight percent of the domestic product depends on the car industry. Only by increasing public investment Germany could become less dependent on US President Trump.