Germany’s economic spring is withering again. As clear as night follows day, the downdraught from Eurozone recession and slower global activity is taking a deepening toll on the German economy. Domestic orders demand remains lacklustre while export orders are critically collapsing now. With two-thirds of German exports destined for the EU, the endemic slowdown there continues to pose a very depressive effect on German factory order books. Even though German economic confidence surveys such as IFO, ZEW and PMI have been painting a much brighter picture of German recovery prospects, it is simply a mirage. There is a growing gulf between economic hope and economic reality. Germany can lead from the front in terms of economic performance, but will always be held back by the recession tail-enders, especially Italy, Spain, Greece and Portugal where economic austerity is really taking a heavy toll on demand. The slowdown in France is also casting a big shadow over its German neighbour.
The ECB can cut rates again in the near term, but something more structural is now needed to help all the Eurozone. Much greater monetary stimulus is warranted from the ECB and Eurozone leaders need to endorse a quick sea-change in fiscal policy to a much more expansive line.
Highlights
GERMAN JAN INDUSTRIAL ORDERS -1.9 PCT M/M (DOMESTIC -0.6 PCT M/M, FOREIGN -3.0 PCT M/M)
GERMAN JAN INDUSTRIAL ORDERS COMPARES WITH REUTERS CONSENSUS FOR +0.5 PCT M/M
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