Germany’s economy grew for the ninth year in a row in 2018, albeit witnessing sluggish growth during that period, according to flash data published last week by German statistics agency Destatis.

Gross domestic product in Europe’s largest economy grew by 1.5 per cent in 2018, compared with 2.2 per cent in 2017, thereby showing the weakest growth rate in five years. Destatis noted that “growth has lost momentum”.

A weaker global economy, poorer sales in the vehicle manufacturing industry, the flu epidemic, strikes, as well as low water levels due to the continuing drought also impacted economic activity, according to the Economy ministry.

Meanwhile, the eurozone’s headline Consumer Price Index (CPI) met economists’ forecasts in December as it dropped to 1.6 per cent from 1.9 per cent in November, according to the EU’s statistical office Eurostat. But the month-on-month CPI remained flat, against expectations that it would fall 0.2 per cent.

The latest inflation rate was the lowest since April, when the rate was 1.3 per cent. Core inflation, which excludes volatile items such as energy, food, alcohol and tobacco, was one per cent in December, unchanged from November. Both the headline figure as well as the core figure were in line with the flash estimates released on January 4.

Finally, in the US, eight of 12 Federal Reserve districts reported modest to moderate growth in December and early January, according to the Fed’s Beige Book released last week. Furthermore, labour markets tightened across the US, as businesses struggled to find workers at any skill level. Wages generally grew moderately.

However, many districts reported that contacts “had become less optimistic” in response to a litany of woes: increased financial-market volatility, rising short-term interest rates, falling energy prices and elevated trade and political uncertainty, the report said.

The Beige Book is snapshot of the economy gleaned by the Fed from discussions with business contacts.

This report was compiled by Bank of Valletta plc for general information purposes only.


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