German economy slowed in 2018 amid growing fears over global downturn

Germany’s economic growth slowed in 2018 to the weakest rate in five years.

The economic slowdown has added to worries about a global downturn and the impact of trade conflicts.

But government statistics officials, who reported that growth eased to 1.5% from 2.2% in 2017, said Europe’s dominant economy did escape a feared recession in the fourth quarter.

Growth in traditionally export-orientated Germany was supported by rising spending at home by consumers and by the government, the agency said.

Unemployment remains low at 3.3% and the economy has grown for nine straight years, cushioning the blow from weaker global trade.

The slowdown in Germany has fed fears about the 19-country euro currency union, which in addition to concerns about trade also faces a possibly messy departure by Britain from the European Union.

While the US and Europe have imposed some tariffs on each other, the bigger trade war between the US and China has weighed on business confidence globally and hurt some of the big European companies that do business in those countries.

China is Germany’s largest trade partner, measured in terms of trade turnover. It is also the world’s largest car market and supplies much of the profits for Germany’s auto industry, led by Daimler, Volkswagen and BMW.

The European Central Bank has indicated that if the economy worsens it could postpone a first interest rate increase beyond the earliest possible date in the autumn of 2019. Some recent market indicators have shown that investors assume rates would stay at current record lows until late 2020.

Worsening economic data had raised fears that Germany may have turned in another quarter of contraction in the fourth quarter, for which figures will be reported on February 14.

German output fell in the third quarter by 0.2%, though the dip was attributed to temporary factors such as bottlenecks registering cars under new emissions testing rules. Two straight quarters of falling output is one definition of a recession.

The statistics agency said there were “signs of a slight recovery” in the fourth quarter compared with the third. Agency official Tanja Mucha said “we are not assuming a minus” in the fourth quarter, but cautioned that the figures are still preliminary.