The German economy will perform 'ok' this year, at least as long as a no-deal Brexit can be avoided, says Klaus Günter Deutsch, Chief Economist of the Federation of German Industries (BDI) in Berlin. Temporary issues in the auto sector should now have disappeared while domestic consumption should remain robust, offsetting some of the pressures stemming from global demand weakness. According to Deutsch, the US is likely to impose auto tariffs on the EU, which would shave off around EUR15-20bn of German exports, or 0.1-0.2 percentage points of GDP growth. Fiscal stimulus based on agreed coalition measures will probably amount to at least 1% of GDP, while the official government growth forecast of now just 1% this year looks on the pessimistic side.
Klaus Günter Deutsch spoke to Beat Siegenthaler of the UBS Knowledge Network in Berlin on Feb. 4.