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The German economy stagnated at the end of 2019, leaving it in a weakened state even before the emergence of the new coronavirus threat.

The performance caps a poor year for the economy, when the worst manufacturing slump in a decade hobbled overall growth. The news Friday wasn’t all bad; third-quarter growth was revised up slightly and the economy avoided the contraction in the fourth quarter that some had feared.

While 2020 was supposed to see recovery -- albeit modest -- that’s now in question amid continued weakness in industry plus fallout from the outbreak in China.

Titans of the German corporate world are already feeling the impact of the epidemic. Volkswagen AG was among the companies forced to shut their Chinese plants because of the virus, and Daimler sees weaker Mercedes Benz sales this year.

The latest round of bad news for Germany kicked off last week, with figures showing the biggest drop in industrial production since the global financial crisis a decade ago. While backward looking, the data put a dent in the recent brighter mood on the back of a pick up in some surveys.

Domestic issues are adding to the uncertainty, with turmoil in government after the resignation of Annegret Kramp-Karrenbauer as head of Angela Merkel’s party and the chancellor’s intended successor.

In its economic outlook this week, the European Commission singled out the coronavirus, which has killed more than 1,000 people in China as a “key downside risk.” While it raised the forecast for Germany, it still sees 2020 growth at only 1.1%.

--With assistance from Kristian Siedenburg, Harumi Ichikura and Richard Weiss.

To contact the reporter on this story: Fergal O'Brien in Zurich at fobrien@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Jana Randow

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