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Asia Today ISSN 1861-4604 Wednesday, July 18, 2018

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Is Europe’s largest economy set for a slowdown?

Industrial production in the country recorded a fall

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BERLIN, Germany - The German Economy Ministry said that industrial production in the country recorded a fall of 1.5 percent in July over the previous month, failing to deliver on analysts’ predictions.> Big News Network

Analysts had predicted that the industry would record a 0.1 percent rise. 

The latest figures have increased worries for Europe's largest economy that looks to be set for a slowdown, after recently also recording a fall in business sentiment for the first time in over four years during the month of August. 

The sharp decline is being seen as a reaction to Britain’s decision to quit the European Union, that is said to have started taking a toll on companies and the country's economy overall.

According to the Economy Ministry, except the energy and construction sectors that recorded a rise of 2.6 percent and 1.8 percent respectively, production in industry fell 2.3 percent, while production of capital goods recorded the largest fall of 3.6 percent. 

In its official statement, the Economy Ministry said, “Companies in the industry sector continue to adopt a wait-and-see approach because of sluggishness in the global export markets.”

The overall growth recorded for the month of June was initially placed at 0.8 percent and later revised to 1.1 percent. 

Recently, Munich-based Ifo economic institute said its business climate index fell unexpectedly to 106.2 in August from 108.3 in July. 

The data was based on a monthly survey of nearly 7,000 firms from sectors like manufacturing, construction, wholesaling and retailing.

The reading was the lowest since February and the sharpest monthly fall since 2012. 

Commenting on the drop in industrial production, ING economist Carsten Brzeski said, “The trend already started long before the British referendum, but clearly the Brexit vote should have been one of the main drivers behind the sharp July drop. More generally speaking, the German industry seems to suffer from weaker activity in China, struggling euro zone peers and a general shift away from manufacturing towards services. Even if industrial production data in the summer months is often subject to later revisions, the sharp drop will feed worries about a further cooling of the German economy.”

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