Economic environment

Expansion in the global economy lost momentum in 2018. After a lively start, the economy showed little dynamic growth towards the end of the year. Overall, global economic growth in 2018 was 3.7 percent, stagnating year-on-year (2017: + 3.7 percent). The reasons for the weak phase can be traced back to burgeoning protectionism, the fear of a no-deal Brexit, unresolved problems in emerging markets, a strong rise in oil prices, and the ongoing trade dispute between China and the USA. China, the most important driving force of the global economy, lost strength in 2018. The US economy, on the other hand, benefited from Trump’s tax reform, among other factors, and grew more strongly than it had for a long time. Nevertheless, the US economy can look back on a tense year in 2018, as even massive tax cuts were unable to reduce the trade deficit.

• Support for the economy primarily through continued consumption and construction boom
• Decline in export momentum in Germany to + 2.4 percent (2017: + 4.6 percent)
• Introduction of new exhaust and consumption standards weakens automotive industry

After two consecutive boom years, growth momentum in Germany, the largest single market of the Würth Group, slowed down in 2018. GDP grew by only 1.4 percent last year, after 2.2 percent in each of the previous two years. Nevertheless, 2018 was the ninth consecutive year of growth since 2010. The construction industry in particular, which is so important for the Würth Group, recorded its highest incoming orders for more than two decades in 2018. Their sales increased by more than 6.0 percent year-on-year to just under EUR 121 billion.

The craft trades sector, with the construction industry being the most important sales market for the Würth Group, also recorded rising sales and strong investments in 2018. In total, the sales volume in the skilled trades sector rose by 5.0 percent (2017: + 3.6 percent) However, both sectors suffered last year as well from the continuing shortage of skilled workers. In the craft trades sector alone, 250,000 jobs remained unfilled. At 1.4 percent, production in the metal and electrical industry, another key sector for the Würth Group, grew significantly less than expected (2017: + 3.6 percent). One reason for this is the decline in demand from abroad, but also the cutback in production in the automotive industry as a result of the economic crisis. Overall, the German automotive industry produced fewer cars in the country in 2018 than in the previous year: A total of 5.1 million vehicles were built in Germany, a reduction of 9.0 percent (2017: 5.6 million). Production in Germany’s mechanical engineering sector increased significantly in 2018, namely by 2.0 percent compared to one year earlier (2017: + 3.1 percent). The two final months in particular have lost momentum, which once again reflects the general geopolitical situation.

The eurozone economy grew more slowly in 2018 than in 2017. GDP for the 19 countries comprising the Monetary Union rose by only 1.8 percent, 0.6 percentage points slower than in the previous year (2017: + 2.4 percent). The uncertainties in world trade and the European problem cases Italy and Great Britain have thus left their mark. The economy in Spain was also down year-on-year in 2018 at 2.5 percent growth (2017: + 3.1 percent). After an interim high in 2017 (+ 1.6 percent), the Italian economy slowed in 2018 and closed with a growth rate of only 0.8 percent. In the last two quarters, the country even slipped into a technical recession, after which the Italian statistical office iStat corrected growth downwards. France was also unable to match the strong growth of 2017 (+ 2.3 percent) in 2018, with GDP growing by only 1.5 percent.

Great Britain remained barely in positive territory. Gross domestic product grew by 1.4 percent, the weakest increase in six years.

The economic situation in the USA continued to develop positively. GDP rose by 2.9 percent in 2018 (2017: + 2.3 percent). At 3.9 percent, the unemployment rate was also significantly below the previous year’s level (2017: + 4.4 percent).

In China, on the other hand, the economy is growing more slowly than it has in almost three decades. Growth amounted to 6.6 percent (2017: + 6.8 percent). India remained the world’s economic engine in 2018. At 7.3 percent, the economy grew even faster than the Chinese economy and grew by 0.6 percentage points year-on-year (2017: + 6.7 percent).

According to initial forecasts, total GDP for Latin America rose by 1.2 percent in 2018 (2017: + 1.3 percent). Overall, the situation was difficult for emerging markets, but GDP growth in the region weakened only slightly due to higher commodity prices and reforms in Brazil and Mexico.

The economic situation in Russia has improved once more. Despite continued Western sanctions, GDP grew by 2.3 percent in 2018 for the second consecutive year. Construction in particular proved to be a growth driver and led improvement over the figures for the previous year (2017: + 1.6 percent).