Published On: Thu, Sep 5th, 2019

Eurozone news: Germany economy crippling with manufacturing industry facing collapse | World | News


Global trade conflicts such as the US-China trade spat and the looming prospect of a no deal Brexit are increasingly burdening Germany, with the industry suffering plummeting orders on German products leading to restrained business expectations. It is expected the EU power state is nowhere near making a recovery, and that recession is now a very real and dangerous prospect. Thomas Gitzel, chief economist of the Liechtenstein VP Bank said: “The misery in the manufacturing sector continues.”

Carsten Brzeski, chief economist of the direct bank ING Germany added the “development significantly increases the probability of a recession for the German economy”.

The Federal Statistical Office confirmed Germany’s order volume fell in July by 5.6 percent compared to the previous year.

New orders for German products were weak volume-wise but particularly from outside of the Eurozone.

This means a dramatic reduction in German trade is not only happening from around Europe, but from the rest of the world too.

The result is catastrophic, with the European Central Bank (ECB) now to ease its monetary policy even further.

The annual decline of Germany is expected to be four percent at the end of the financial year of 2018/2019.

The news comes after the German economy shrank by 0.1 percent in the second quarter, gross domestic product figures revealed today sending Germany halfway towards recession as Angela Merkel faces economic contraction.

Typically thought of as a powerhouse in the European economy, Germany recorded a shrinking economy as the quarterly gross domestic product figures were published mid-August.

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“Trade wars are never good and for an economy that relies as much on exports as German industry, that is a very important factor.”

Economists are worried these factors could trigger the first-ever recession for the world’s fourth-largest economy.

Exports for Germany have fallen eight percent over the past year for the export-reliant country, and industrial production itself has fallen by 5.2 percent.

The Chinese market being under strain is one reason Germany is struggling as in 2018, nearly a quarter of all cars sold in China were German.

The jobs market is also declining, with just 1,000 jobs created in June – far less than the 44,000 average growth in June.

Adding to the problem, a number of industrial companies have also cut workers hours recently.

Additional reporting by Monika Palenberg.



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