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Less zoom, more gloom in German economy

Thursday, October 08, 2015 - 01:41

German exports plunged in August by their largest amount since the height of the global financial crisis and imports also fell sharply. As David Pollard reports, it's the latest sign that Europe's largest economy is feeling the pain from a slowdown in emerging markets.

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With Germany's top carmaker embroiled in scandal over its diesel engines, is there now a sense the country's growth engine is in trouble too? These are the leading German economic forecasters. As expected: they've cut their growth outlook for this year and next - to below 2 per cent. It comes swiftly after an IMF global downgrade and a string of other weak German data. Professor Roland Doehrn of the RWI. (SOUNDBITE) (German) RWI'S DEPARTMENT CHIEF OF MACROECONOMICS AND PUBLIC FINANCE, PROF. ROLAND DOEHRN, SAYING: "The euro zone recovery continues, but emerging economies, including China, will be considerably slower and exports will probably only expand at a moderate rate." And right on cue, the German stats office has confirmed that August saw the sharpest fall in exports since the height of the financial crisis. Imports were also down - though that could be because of the large number of holidays this August. China is a macro factor. But look under the corporate microscope and, on the same day, you'll see Germany's biggest bank, Deutsche, flagging a massive six billion euro loss for the third quarter. And its biggest car manufacturer in the global dock over its diesel emissions. (SOUNDBITE) (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: ''When you consider that one in every six Germans works either directly or indirectly for the automotive industry, it does highlight how perilous the situation could be if it were to escalate and become worse, and the knock-on consequences for the German economy.'' Step forward the ECB. It's hinted at more monetary stimulus to boost growth. But today its chief economist, Peter Praet, described the euro zone pick-up as "disappointing". And spoke of a "seeping pessimism" creeping into the long-term outlook.

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Less zoom, more gloom in German economy

Thursday, October 08, 2015 - 01:41