Commentary: Few seem to have noticed them yet, but there are worrying signs Europe’s exporting powerhouse can be slowing sharply
Retail sales are dropping sharply. Industrial production is slumping. Construction is slower and the government is poor and clueless with small idea of how to respond to falling demand. No, don’t fear, you haven’t accidentally found a hardcore remoaner rant of a declining, irrelevant Britain. That could be actually a description of what is intended to be the eurozone’s strongest economic system – Germany.
Very few people seem to have recognized it yet but you will discover worrying signs the dispatching powerhouse at the centre of the eurozone is certainly slowing down sharply. True, it may only be a blip. Then again, that is how most recessions start. Tips what is happening, and the evidence is mounting all the time, that will be catastrophic for the whole sole currency area. No development has been made on reform, plan responses are limited and electorates are exhausted by austerity. One more economic downturn might be the last.
Most mainstream economists have bought into the story that the eurozone is booming this year. Brought by a powerful Germany, along with France reviving under lead designer Macron, and with a central financial institution that is still pumping the particular economy with printed dollars and near-zero interest rates, production is rising and joblessness as a final point falling. Heck, even Italy and Greece have been thriving again. Investors have been pouring cash into the continent, and also the currency has been soaring, as anyone planning a holiday in France or perhaps Spain will quickly discover.
But hold on. There are some suspicious numbers rising that don’t quite in good shape that narrative. Start with Malaysia. This week we learnt retail industry sales dropped by 0.8 per cent in February. They already have fallen in six within the last eight months and all of the last three. On Fri, industrial production figures highlighted output down by 1.6 per cent, the largest once a month fall in three years. Manufacturing unit orders came in way underneath expectations this week, with a simple 0.3 per cent recovery after the 3.5 per-cent drop in January, and engineering spending is also down. The truth is, the only part of the German economy still expanding is it’s export industry, but even that is under threat.