FORECASTS, News

Germany enters recession?

Outrageous Predictions for 2019 released by Saxo Bank, list unlikely – but not impossible – events that may come to life. According to one of the predictions, tariffs on German cars and a lack of digitalization may leave Germany limping into a recession before the end of 2019. As well, Merkel declines to run for chancellor again, setting up a power struggle in German politics at a time when the country needs stability and a major transformation of Europe’s most powerful economy.

A global leader for decades, Germany has struggled to upgrade and leverage the latest technology across the public and private sectors, the analysts say. A 2017 study by the OECD, for example, ranks Germany 29th out of 34 developed economies for high speed internet.

Car industry represents 14% of the national GDP. The German automotive world, however, is far behind in terms of its conversion to electric vehicles and the use of big data. The global car industry only managed to unload 81 million cars in 2018, a mere 2% more than in 2017 and well down from the 5-10% yearly growth rates that characterized the 2000s.

By 2040, 55% of all new global car sales and 33% of the stock will be EVs, Saxo Bank believes. But Germany is just starting the transformation to EV and is years behind, and stiffer US tariffs won’t make things any better for German supply chains or exports. 2019 will be the peak of anti-globalization sentiment and will create a focus on costs, domestic markets and production, and the further use of big data and reduced pollution footprint – the exact opposite of the trends that have benefitted Germany since the 1980s, the prediction concludes.

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