Germany is definitely on the ropes

| 7 July 2008 09:27

The FT reports:

The eurozone economy has shown fresh signs of spluttering, with German industrial production dropping unexpectedly sharply in May – the strongest monthly fall since August 1997.
-FT, 7 Jul 2008

This is the latest sign in a string of reports that point to a deepening slowdown in the heart of Europe. Just this past Friday factory orders came in below expectations (see story). Moreover, retail sales have been falling and wage conflict rising as inflation takes its toll on the German economy.

Given how buoyant Germany had been in 2007, one must conclude that the downturn in German fortunes are an outgrowth of the credit crisis and contagion from the U.S. in particular.

As the slowdown in the U.S. started, many pundits wondered allowed whether the world could de-couple from the U.S. this time, and continue to grow at or above trend. As far as Germany is concerned, we have the answer: no.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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