In December the ifo business climate index fell to its lowest level for more than two years. Political uncertainty is likely to have contributed to the further decline. Nevertheless, we expect a countermove to the slump in growth in the third quarter for both the current and the coming quarter. By the end of the first quarter of 2019, the problems in the automotive sector associated with the new emission test procedure WLTP, which were primarily responsible for the weak third quarter, should have been largely resolved. The extent of the expected rebound and dynamics of economic development in 2019 will strongly depend on how long political risks such as the trade conflict with the U.S. and the Brexit uncertainty will stay with us. In principle, the domestic economic conditions are still in place for the upswing to continue, albeit at a more moderate pace. However, with real GDP growth of +1.6% this year and +1.7% next year (working-day adjusted), the rate of the previous years will no longer be reached.
