Germany appeared to be safe from Europe’s debt crisis, due to the deep reforms undertaken years ago, however recent data suggests that Germany, too, is slowly giving in to the crisis fevers. Analysts believe it could even be falling back into recession later this year.
The obvious route of infection to Germany, the world’s third largest exporter behind China and the United States, is through the main driver of its economy; its exports.
The country had a growth of 0.5 per cent in the first quarter this year, while many of its neighbours were in recession.
However analysts believe with the current situation in much of Europe, Germany’s stuttering exports are threatening to bring the economy to a standstill in the second quarter.
Recent data compiled by Destatis, the national statistics office, show that exports fell by 1.5 per cent in June, after an increase of 4.1 per cent in May, mainly due to the drop in demand from the other 16 nations making up the Eurozone.
Imports were down too, falling by 2.9 per cent, representing a drop in domestic demand and affecting industry and the manufacturing sector.
Factory orders fell more than expected, by 1.7 per cent in June, and there was a decline of 0.9 per cent in industrial output.
There was a sharp drop in new car registrations, a key indicator of demand in one of the most important industrial sectors, with a decline in retail sales and an indication that unemployment is on the rise again, which could hurt consumer spending.
Last month, business confidence dropped for the third month in a row and investor confidence hit a six-month low.