Is Germany Falling On Hard Times?
Marc Chandler | Oct 07, 2014 12:07PM ET
This Great Graphic comes from Markit's Chris Williamson. It illustrates that the German good producing sector has fallen on hard times again. The economy contracted by 0.2% in Q2. Another decline in Q3 cannot be entirely ruled out, though it may just escape with something just above stagnation.
Get The News You Want
Get The News You Want
Get The News You Want
Get The News You Want
Get The News You Want
Get The News You Want
Get The News You Want
The main cause that most politicians and economists will focus on is the impact from the sanctions and counter-sanctions over Ukraine. This is indeed a contributing factor. Another external headwind may come from China, which has also clearly lost its sizzle. There may also be domestic, structural headwinds. In terms of reforms, German has been resting on its laurels, which some Bundesbank officials have noted in criticism of Berlin.
Get The News You Want
While cognizant that Germany industry has supply chains throughout western, central and eastern Europe, the divergence between the German economy and the rest of EMU may help explain part of the different policy stances. Germany, after all, is one of the few major economies that is larger now than before the crisis. It is the only major country that has expanded faster in the last five years than it did in the five years through 2007.
Get The News You Want
The weakness of the German economy will not do the economies of the periphery much good. However, the German economic strength didn't do the euro zone much good in terms of growth either. The channel that might be impacted is policy. A Germany that is a recession is likely to see its interests more aligned with the weaker parts of the eurozone, especially given that the government is a coalition between the CDU and SPD.
Get The News You Want
Get The News You Want
Get The News You Want
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.