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Brexit, Trump Are The Biggest Risks To Economy According To German Industry

Brexit, Trump Are The Biggest Risks To Economy According To German Industry
The biggest risks to global as well as domestic economic growth potential was posed by the trade disputes that have been initiated by United States president Donald Trump against China, Europe and other countries and the uncertainty that reigns over the departure from the European Union (EU) of the united Kingdom, said Germany's leading industry groups on Wednesday.
It is expected that in 2018, its worst performance in terms of economic growth rate for many years now would be posed by the German economy which is the largest economy of Europe. The main reason for this is multiple headwinds that its exports industry is facing from abroad. However German companies are still able to expand and grow because of a vibrant and robust domestic demand of goods and services.
According to the majority view of respondents in a survey which was recently conducted by the news agency Reuters, there is little chance that the German economy would slide into recession, said the heads of Germany's leading industry associations. The survey also showed that the economic growth projections by most forecasts are putting the possible 2019 numbers to be about 1.5 per cent.
But the economic woes of company executives were increasing, said the industry associations and demanded that the more should be done by the German government to help them out. One of the way outs as suggested by them was the lowering of corporate taxes and increasing investment in areas such as digital infrastructure.
"The biggest risk in the short term is Brexit," said Dieter Kempf, president of the BDI industry association.
Kempf warned that there would be massive uncertainties for trade and business in case there was no deal on the trade and other relations between the UK and the EU when Britain formally leaves the economic block on the schedule date in March next year.
"The British economy would face the direct threat of a recession which would indirectly also affect Germany," Kempf said.
Brexit was the "most urgent problem for the German economy", said Holger Bingmann, head of the BGA trade group, and added that the global and domestic the economic upswing could potentially be derailed because of an escalation of international trade spats triggered by the United States and its president Donald Trump.
The possibility of the U.S. imposing additional import tariffs on European cars was still a cause of worry for German companies. said DIHK President Eric Schweitzer. "The threat of car tariffs is still on the table," Schweitzer warned.
Schweitzer said that a solution to the trade spat between the two sides should be esolved soon through negotiations which could even lead to a reduction in tariffs and the effort should be made by both the sides.
Compared to a growth rate of 2.2 per cent in 2017, the growth rate in the German economy for the current year would likely be about 1.5 per cent.

Christopher J. Mitchell

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