GDP Growth – USA and GER

GDP Growth Rates for the USA and Germany (2019 Q4)

Although advance growth estimates were released previously, I preferred to wait for the third estimates for a healthier analysis – which are released on March 26. According to the US Bureau of Economic Analysis (BEA) real gross domestic production (GDP) increased at an annual rate of 2,1% in the third quarter of the year 2019. Compared to the same period of last year, the growth rate is 2,3%.

The engines of growth are; positive contributions from personal consumption expenditures, private inventory investments, exports, residential fixes investment and federal/local government spending.

At the above graph, I have plotted the percentage change in GDP values both annually and quarterly. Figures are seasonally adjusted and chained to a reference year. Annual changes, which compare the data with the same quarter of the previous year, are represented with blue columns and quarterly changes are shown with a red line. 

After having a good first quarter in 2019, with a solid 3,10%, the US economic growth fell down to a 2,0% rate in the second quarter. It seems now third and fourth quarters’ data, which are both 2,1% shows a saturation at this level. And as we globally come to a halt point it won’t be a prophecy to expect a drastically low figure for the first quarter of 2020.

——————– ∞ ∞ ∞ ———————

When it comes to the German economy, the scenario is pretty unpleasant. After long years of successive growth periods, German economy is nowadays struggling to pick up the pace. And considering the damage done by the Covid-19 it is not easy to have great expectations in the following quarter.

According to German Federal Statistics Office (DESTATIS), GDP growth rate hit the 0,0% growth at the fourth quarter of 2019, compared to the previous quarter. After recovering from the negative zone at the second quarter and reaching 0,2% at the third quarter Germany has avoided a technical recession for the second time after 2018/q3. But this time challenge will be a little bit tougher.

For the annualised data of 0,4% growth, which reflects the change against the same period of the last year, we can state that the economy is approaching to doldrums. A drastic slow down on exports and automotive sector, and drying consumer demand are first to detect as problematic areas. And it is light to blame BREXIT and trade wars for that. But rather than pointing fingers to culprits, it would be more benevolent to looking for solutions. It’s being said, I am also aware that it won’t be so easy to get one in this terrible times. However, I believe that with strong budget and weak inflation data, eventually German economy will get over that by applying fiscal and monetary measures in accordance with the EU.  

Ergun UNUTMAZ, 06.04.2020

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