The German economy on the way to normalization

German growth stopped during the second half of 2018. During this period, the GDP was up by only +0.1% compared to the first six months (at annual rate).
It can be seen on the graph that the main source of growth inflection is external demand. Its contribution fell sharply in the second half of the year. The slowdown in trade with China and Asia (a consequence of a Trump effect on Chinese trade) explains the stagnation of exports. But imports are growing rapidly due to a strong private domestic demand.
This is the major point of the graph. Until 2015, the contributions of internal private demand and external demand were of the same order. This is no longer the case and private demand is now the main contributor to growth and with a certain margin. The weight of foreign trade is still important in Germany, but it’s no longer the main source of the German dynamics.
The German economy is normalizing its structure and it becomes comparable to other developed countries where the main source of the GDP growth is the private demand. This shows a greater dependence on its internal market. This is not bad news for the Eurozone.

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