In Germany it is said "It's warmer than that“: let's dress warmly, the great cold is coming. Today's data with the drastic drop in industrial production It is the latest in a series of not very good data from the German economy. TheGermans' mood is bad: the average Teutonic, who cannot stand weakness and error, has already been discouraged by the first discouraging data of the last few months closed at home, he doesn't even spend money on a beer anymore, fearing the worsening of conditions. In fact, screwing itself up: “Be rolled up“, like the shutters closing. The symbol of this state of mind the news of the possible Closing of a factory Volkswagen, unprecedented event for the car company.
A slowdown or, worse, a derailment of what has always been considered the driving force of Europe is not good news for the other countries in the Eurozone which are already feeling the effects of the drastic fall inChinese economy. If he were to win then Trump and his UsFirst imposing noose trade rules on us, there is little to be happy about.
Industrial production in Germany falls by 2,4%
In July in Germany the industrial production recorded a decline of 2,4% month-on-month and 5,3% year-on-year, the German Federal Statistical Office Destatis said this morning. In the quarter. In addition, Destatis reported that Germany's trade balance recorded a surplus of 16,8 billion euros in July. On a monthly and seasonally adjusted basis, exports increased by 1,7% and imports by 5,4% compared to June 2024.
Consumer confidence at rock bottom and services struggling
But what explains the German character even more is the index of consumer confidence, released in recent days by the Gfk institute: in September it fell to -22 points, a historic low, after the -18,6 of August, released at the end of July. The service sector German. The PMI services rose from 52,5 in July to 51,4 in August, while the forecast was for 52,3. “The difficulties in the manufacturing sector are starting to have an impact on the otherwise stable services sector,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “For the third consecutive month, growth in services activity has slowed.” He added: “the recovery expected for the second half of the year is failing to take shape” despite there being reasons to be confident, such as “lower inflation and rising wages.
Economic growth forecasts.
Germany to experience zero economic growth in 2024
At this point we have to ask ourselves how the GDP growth in Germany, but also in the the euro area. THEGerman Institute Ifo has revised its estimates downwards and now indicates a forecast of zero growth this year in Germany, to then rise to a modest +0,9% in 2025 instead of the 1,5% as previously estimated, growth that he now sees in 2026 if anything, according to. “The German economy is blocked and languishes in depression” is the image offered by Timo Wollmershäuser, head of the 'Forecasts' department at Ifo. According to the economist, Germany is suffering from a structural crisis: “investment is too low, especially in manufacturing, and productivity has been stagnant for years.”
This morning too France released the data on industrial production, also down but limited to -0,5% compared to the previous month of June when it had rebounded by 0,8%. Manufacturing production is suffering the most, down by 0,9%.
In Italy, industrial turnover in June increased in quarterly terms by 0,1% in value and decreased by 0,7% in volume. On a trend basis it recorded a decline both in value (-3,7%) and in volume (-3,3%).
As regards the economic growth of the Eurozone and EU, Eurostat today announced a GDP in the second quarter increased by 0,2% compared with the previous quarter. In the first quarter of 2024, GDP had grown by 0,3% in both areas. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 2024% in the euro area and by 0,6% in the EU in the second quarter of 0,8, following +0,5% in the euro area and +0,7% in the EU in the previous quarter.
Politics fears further paralysis
After the victory in Länder of Thuringia and Saxony of the far-right AfD and the left-wing populist party Bsw, the vote is now expected in two weeks Brabdeburg, the state surrounding Berlin, home of Olaf Scholz. In any case, what is most feared from an economic point of view it's a'further paralysis.
The Economist Monika Schnitzer, president of German Council of Economic Experts, the independent body that advises the government on economic and financial policy issues, is alarmed by the power vacuum which could drag on for a long time: “Due to the unclear situation of the majority, the forming a government will be difficult, in Thuringia even more difficult than in Saxony, and it could take weeks or even months,” he said. Without a stable majority there is no political decisions and above all no approval will be made state budget. “This means that businesses, universities, cultural institutions and citizens they have no planning security of their strategies,” added the economist: “Uncertainty is a poison, especially for the economy; companies will delay or completely abandon the investment plans, with negative effects on growth. We therefore need to quickly clarify what happens next, including the options of a minority government or even new elections.”
The hypothesis of the locomotive detachment
On the other hand, the AfD leader Alice Weidel In an interview with the Financial Times, Wiedel said that Brexit could be a model for Germany. And the idea is still on the table. “Dexit, Germany’s exit from the EU, is a last resort for us,” he explains. “We don’t want to destroy things, we want to reform them. But it can only happen if our European partners understand that they must respect our most vital interests. Germany does not need the EU to survive. The EU, on the contrary, needs Germany. The EU should behave accordingly. Only under these conditions will a German exit from the EU not be necessary.”
