Business World

Tuesday 16 July 2019

Slowdown has stunted Germany's growth

The European Central Bank building, Frankfurt. Photo: Bloomberg
The European Central Bank building, Frankfurt. Photo: Bloomberg

Carolynn Look

German factory orders slumped in May in the latest sign that global trade uncertainty is turning Europe's temporary slowdown into a more serious downturn.

The economy ministry reported large declines in export orders and investment goods, just days after a survey showed factory activity shrank for a sixth straight month in June. The continued gloom is increasing concern at the European Central Bank (ECB), adding fuel to predictions it will add more monetary stimulus as soon as this month.

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The 2.2pc overall drop on the month was more severe than the 0.2pc fall economists predicted, and the year-on-year decline of 8.6pc was the biggest in almost a decade.

ING said the report "wraps up a week to forget," and JPMorgan now predicts that Germany may have contracted in the second quarter. If that happens, it would be the third time in a year that Europe's largest economy posted no growth at all.

The ECB's Olli Rehn warned it was no longer possible to consider the downturn as temporary.


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