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Will China hurt Germany's rising morale?

Tuesday, August 25, 2015 - 01:36

A strong rise in German exports outstripped gains in imports to power growth of 0.4 percent in Europe's largest economy in the second quarter, new data shows. But as Sonia Legg reports there are fears China could damage Europe's slow recovery.

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It's powering ahead - German business morale rose in August - the latest in a string of positive economic data from Europe's biggest economy. The Ifo economic institute surveyed 7,000 firms. Its economist Klaus Wohlrabe said its readings were the strongest since May. (SOUNDBITE) (German) IFO ECONOMIST, KLAUS WOHLRABE, SAYING: "The increase is mainly due to the excellent consumption by consumers. Germans continue to buy and the mood has clearly improved among retailers. The construction industry too is happy about good orders." But IFO says the exports that drove second-quarter expansion are about to falter as China slowdowns. And companies say they are worried. Lower oil prices should help, fuelling that consumer demand And IFO stuck to its forecast of 1.7 percent growth for the year. Jeremy Batstone-Carr is from Charles Stanley. (SOUNDBITE) (English) DIRECTOR OF PRIVATE CLIENT RESEARCH AT CHARLEY STANLEY, JEREMY BATSTONE-CARR, SAYING: "Demand continues to exist for high quality German products and therefore the German exports sector continues to hold up pretty well albeit one can't deny that there are risks associated with Germany's trade with Asia." 'Yet' may be the key word though. France's Economy Minister - in Berlin for talks - says the risks should not be underestimated. (SOUNDBITE) (English) FRENCH ECONOMY MINISTER, EMMANUEL MACRON, SAYING: "China has contributed much to global growth in the past 10 years. It's development has been based on a compromise between society and the ruling party. Economic success and political stability, if the former is changed the latter is at risk." German firms also accept that. But more than two-thirds have stuck with their guidance for the year.

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Will China hurt Germany's rising morale?

Tuesday, August 25, 2015 - 01:36