Global economic growth suffered a setback in 2019. The marked downward trajectory had not been corrected by the end of the year either. All in all, global economic growth came to 2.9 percent in 2019, down considerably on the previous year (2018: + 3.6 percent). The weak global economic trend can be traced back to the trade dispute between the US and China, the protracted Brexit negotiations between the UK and the EU, and also structural pressures, such as lower productivity growth, particularly in the automotive industry, unresolved problems in the world’s emerging markets, an increase in anti-government protests in countries such as France or Chile, and the conflicts looming on the horizon between the US and Iran. With a slowing of gross domestic product growth in both China and the US, the world’s two largest economies lost considerable momentum. As a result, 2019 saw the lowest level of global growth since the financial and economic crisis of 2008/2009.
- German economy bolstered by sustained consumption, high employment and a flourishing construction industry
- Drop in export momentum in Germany to + 0.9 percent (2018: + 2.1 percent)
- Global economy hit by reduced production in the automotive industry
As was already the case in 2018, growth momentum in Germany, the largest single market for the Würth Group, also slowed in 2019. GDP expanded by only 0.6 percent last year, as against 1.5 percent in the previous year and 2.2 percent in 2017. This means that German economic growth touched on a six-year low in 2019, bringing it to the brink of recession. Key sectors of the German economy, such as automotive manufacturing and mechanical engineering, as well as the electrical and chemical industries, were hit particularly hard.
The fact that GDP in Germany increased slightly in spite of these developments is thanks to sustained consumption, the country’s high employment rate and the construction industry, a sector that is so important for Würth and that generated sales of EUR 137.2 billion in Germany (2018: EUR 126.6 billion). This represents a total increase in sales to the tune of 8.4 percent compared to the previous year. At EUR 86.1 billion, incoming orders for 2019 as a whole were up by 8.2 percent on the previous year’s figure.
In the trade sector, one of the two key markets for the Würth Group, the economic boom continued in 2019, albeit at a lower rate of growth than in the previous year. Total sales generated by craft businesses in Germany increased by 3.8 percent in 2019 (2018: + 4.9 percent). The number of people employed by craft businesses also rose slightly by around 40,000. Nevertheless, many companies felt the impact of the shortage of skilled workers, with a large number of apprenticeship positions remaining unfilled. Production in the metal and electrical industry, another important pillar for the Würth Group, already slipped into recession, where it remained for all of 2019. Looking at 2019 as a whole, M+E production was down by 5.1 percent on the previous year (2018: + 1.4 percent). This development can be traced back to a drop in production due to crises, especially in the automotive industry. With just under 4.7 million vehicles produced in 2019, the German automotive industry again produced fewer cars than in 2018 (5.1 million), which equates to a drop of 8.9 percent in production (2018: – 9.3 percent). Production in the mechanical engineering sector also experienced a downturn in 2019, contracting by 2.0 percent (2018: + 2.1 percent).
Gross domestic product in the 19 countries making up the European Monetary Union rose by only 1.2 percent in 2019. This means that eurozone economic growth was down in a year-on-year comparison for the second year running. Growth was still sitting at + 1.9 percent in 2018. The slower growth was triggered by ongoing global trade disputes, contracting economies in France and Italy, and the state of paralysis caused by Brexit. The Spanish economy, too, the fourth largest in the eurozone, reported growth of 2.0 percent in 2019, falling short of the prior-year level (2018: + 2.6 percent). Economic growth in Italy dipped by a significant 0.6 percentage points in 2019. Economic output expanded by only 0.2 percent (2018: + 0.8 percent). The eurozone’s third-largest economy has already been considered a problem child for years now, with economists pointing to its excessive bureaucracy and very rigid labor market. France, crippled by strikes over Emmanuel Macron’s pension reform, experienced something very close to a recession in 2019, closing the year with a growth rate of 1.2 percent (2018: + 1.7 percent).
The UK economy reported anemic growth again in 2019 due to the negative impact of Brexit, a historic step taken by the country at the end of January 2020. Although the increase in gross domestic product was up by 0.1 percentage points on the previous year, it remained in weak territory at + 1.4 percent (2018: + 1.3 percent).
While US economic growth showed a gradual slowdown in the course of 2019, the US still outperformed the eurozone as a whole. GDP rose by 2.3 percent in 2019 (2018: + 3.1 percent). The unemployment rate was once again down on the previous year at 3.6 percent (2018: 3.9 percent).
The year 2019 saw the Chinese economy grow at the slowest pace witnessed since 1990. Based on the figures released by the National Bureau of Statistics in Beijing, the world’s second-largest economy expanded by only 6.1 percent (2018: + 6.6 percent). This was triggered by the trade dispute with the US, but also by the high level of debt, putting pressure on state-owned businesses. While the government invested heavily in the economy and infrastructure in a quest to make the country more innovative and productive, this initially weighed on economic growth. India’s economy also failed to match the strong growth seen in the previous year in 2019 (2018: + 6.8 percent). At only 4.8 percent, GDP growth was actually two percentage points slower in 2019 than experts had predicted.
Latin America’s economy is heading towards a recession with meager growth of only 0.1 percent (2018: + 1.3 percent). One reason for this lies in the weak economic performance in Mexico, one of the largest economies in Latin America.
After two consecutive years of growth, Russia’s economic upswing tapered off in 2019. GDP grew by only 1.4 percent, down by 1.1 percentage points compared with 2018 (+ 2.5 percent).