GDP growth came in at +0.25% q/q in Q4 2018, fully driven by net exports. Full-year 2018 GDP growth declined from +2.3% in 2017 to +1.5% in 2018. Two thirds of the latter was driven by a high carryover at the start of the year. In Q4, household spending decreased by -0.1% q/q. This weakness was the result of several factors, such as the second oil price spike (in October, after May), difficulties in the automotive sector (partly driven by new homologation rules and their impact on German carmakers) and the yellow vest blockades. The missing household spending was pervasive in Q4, since residential investment deteriorated to +0% y/y (+5.1% in Q4 2017) and private consumption to +0.6% y/y (+1% y/y). As a result, manufacturers had to stabilize their output in Q4 2018 (+0.1% q/q) and construction output posted a double dip decline (-0.1% in Q4 after -0.2% in Q1). In 2019, current spending is expected to recover (purchasing power should increase by +2%) and push GDP growth to +1.2%, but increased unemployment (9.2%) will weigh on residential and durable goods spending of households.
