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How long will German gloom last?

Tuesday, December 09, 2014 - 01:42

German imports posted their steepest drop in almost two years in October, while exports also fell. But as Sonia Legg reports, economists remain upbeat about the prospects for Europe's largest economy.

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She upset some in France and Italy at the weekend with comments about the government's reluctance to reform. Two days on, the German Chancellor was still stressing the need to respect European fiscal rules. (SOUNDBITE) (German) GERMAN CHANCELLOR ANGELA MERKEL SAYING: "Europe's debt crisis was fundamentally a crisis of trust and if we do not follow through with our resolves regarding this crisis then we will squander the trust and that would not be good for Europe. We must be vigilant about compliance with the rules." Germany has its own difficulties at the moment. There's been a load of weak economic data recently - and it keeps coming. The latest - the steepest drop in imports for almost two years and a fall in key exports. Philippe Gijsels is Chief Strategy Officer at BNP Paribas Fortis (SOUNDBITE) PHILIPPE GIJSELS, CHIEF STRATEGY OFFICER AT BNP PARIBAS FORTIS, SAYING: "The German economy is fairly strong with low unemployment so you would hope there would be some consumption going that would clearly help the rest of the euro zone. With this figure that's not the case of course - it's only one figure and we will have to see further but if you want to convince France and Italy and others to do some work on the restructuring side then probably Germany should do its part as well and get consumption going." Germany's economy was once revered for its strong growth - even during the euro zone crisis. But it narrowly avoided recession in the third quarter. And while the outlook for the fourth looks rosier there are other issues which could hurt. Germany's firmly against full sovereign bond buying by the ECB despite worryingly low inflation and equally low growth. But it may soon have to accept that unless its economy can stimulate the rest of the euro zone - the central bank may have too.

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How long will German gloom last?

Tuesday, December 09, 2014 - 01:42