German economy weighed down by weak auto production: Bundesbank

BERLIN, March 18 (Xinhua) -- Industry, in particular weak automobile production, proved to be the main burden for Germany's sluggish economic development in the second half of 2018, according to the monthly report from the German national bank (Bundesbank) published on Monday.

The German current account recorded a surplus of 18.3 billion euros (20.7 billion U.S. dollars) in January 2019, almost 5 billion less than the previous month. The account surplus in 2018 in relation to Germany's nominal gross domestic product (GDP) declined by 0.75 percentage points to 7.25 percent due to a marked decrease in the surplus in trade in goods.

Although imports of goods rose strongly in view of the favorable domestic economy, the decline in world trade growth had clouded Germany's export balance, according to the Bundesbank.

As in the previous year, the sharp rise in the price of internationally traded raw materials had reduced the active balance in merchandise trade

Industrial production fell sharply by 1.25 percent in January 2019, seasonally adjusted, compared to the previous month. According to the Bundesbank, the decisive factor was a 5.75 percent decline in production in the automotive industry.

The Bundesbank cited the introduction of the new Worldwide harmonized Light Vehicles Test Procedure (WLTP) exhaust gas treatment system as the main reason for the weak growth of the automotive industry but is not expecting "any major catch-up effects" in the automotive industry in the first quarter of 2019.

The German labor market also defied the overall economic slowdown as employment grew strongly at the beginning of 2019. According to the report, the total number of persons employed in Germany in January, seasonally adjusted, rose by 79,000 compared with the previous month.

"Consumers are benefiting from the continuing good prospects for the labor market and income," the Bundesbank noted.

In addition, the Bundesbank reported that only a small part of cash is misused in the so-called shadow economy in Germany. However, the bank highlighted the difficulties in demonstrating the extent to which cash is actually used for illegal purposes.