Growth in Germany stalled in the last quarter of 2019 as consumers became more cautious about spending, leaving the economy weak as it started to feel the effects of the Corona virus outbreak in China.
Germany’s economic growth was zero from October to December Federal Statistics Office On Friday, he said, down from 0.2 percent growth in the previous quarter. The chances of Germany returning to rise this quarter are slim due to the outbreak of the Corona virus in China, which has hampered one of Germany’s most important customers and suppliers.
Disruptions in disease outbreaks are becoming more evident in Europe. Fiat Chrysler Motors said on Friday it had stopped production at a factory in Serbia because of a shortage of parts made in China.
The shutdown, apparently the first by a carmaker in Europe, will increase fears that the coronavirus could drain the little growth that the continent has been able to mobilize recently.
“The crisis threatens to deliver a heavy blow to the troubled industrial sector,” Angel Talavera, an economist at Oxford Economic University, said in a note to clients on Friday.
The euro zone grew by only 0.1 percent in the last three months of 2019 compared to the previous quarter, in the European Union Official Statistical Office Friday said, confirming an earlier estimate. This was the slowest rate of expansion in six years. Growth for the whole year was 1.2 percent, down from 1.9 percent in 2018.
Germany did not perform poorly as some economists had expected. The sharp drop in orders for industrial goods led to the prediction of a recession. Total growth for 2019 was 0.6 percent, compared to 1.5 percent in 2018.
Until recently, spending by German consumers helped offset the decline in manufacturing. But consumers became more cautious at the end of the year, and they may have worried about the headlines about the loss of major jobs in German automakers.
Companies like Daimler, which posted quarterly losses this week, have slashed jobs due to falling demand and the cost of developing new technology it needs to stay competitive.
The problems in the auto industry are not limited to Germany. French car maker Renault said on Friday This profit virtually evaporated in 2019. The company admitted that it was a “turbulent year”.
Renault said net profit in 2019 fell to 19 million euros, or about 21 million dollars, from 3.5 billion euros in 2018.
Renault also warned that its goal of maintaining stable sales at 56 billion euros during 2020 could be jeopardized by “potential impacts related to the Corona virus health crisis”.
Renault closed a plant in Busan, South Korea, on Tuesday due to supply chain problems. Renault plans to reopen the factory, a joint venture with Samsung, next week. A Renault spokeswoman said the plant in Wuhan, China, the epicenter of the outbreak, would remain closed at least until next Friday on the orders of the government.
In China, two German car makers, BMW and Volkswagen, are preparing to reopen factories that have closed since the start of the Lunar New Year holiday. Automobile manufacturers are keen to resume production in China to avoid any lost sales in the world’s largest auto market.
Volkswagen, which gets nearly half of its sales from China, said all of its plants would be operational by Monday. The company acknowledged that “it faces challenges due to the delay in restarting supply chains across the country in addition to limited travel options for production staff.”
Fiat said supply problems prompted it to press ahead with planned shutdowns at the factory in Kragujevac, Serbia, which produces the Fiat 500 subsidiary. The company said it did not expect the impact to be too difficult.
“We are in the process of securing future supplies for those affected parts, and production will be restarted later this month,” Fiat said in a statement. “We do not expect this change in scheduling to affect the expected total production for this month.”