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Germany, a Sinking Industrial Giant
November 11, 2019
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Germany, which is known as an industrial powerhouse having enjoyed the benefits of the EU’s currency initiatives and positive trade policies, is nonetheless a developing country in terms of financial markets. But it is still surprising that the market value of all listed German companies is $2.18t, smaller than the two largest U.S. Corporations, Apple and Microsoft listed at $2.23t
 
Figure 1: Total German Market Cap vs. Apple+Microsoft

Source: Schukdensuehner
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​France, the euro area’s second-largest economy is outpacing its neighbor and the region as a whole -- excelling in weathering blows from trade wars and weaker global momentum. Some of the divergence is due to fortuitously timed tax cuts and less reliance on exports, but it also reflects early dividends from President Emmanuel Macron’s reforms that aim to sow the seeds of longer-term growth. After years of measuring unfavorably against Europe’s economic powerhouse Germany, France may finally have something to crow about.
 
Figure 2: GDP Growth, Germany, France and EU

Source: National Statistics Offices
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​In the third quarter, the French economy posted better-than-forecast 0.3% growth, with domestic demand a key driver. Surveys for October showed stronger French growth at the start of the fourth quarter, while Germany was weighed down by manufacturing. The EU’s executive arm warned that the 19-member region is now set to grow at a pace of 1.1% this year and 1.2% in 2020. In its previous forecasts, the European Commission had estimated a 1.2% growth rate for the euro zone in 2019 and 1.5% for 2020.