Germany, the locomotive of Europe’s huge economy, is entering a difficult period, various indicators suggest. And when the Federal Republic sneezes, the Old Continent usually catches a cold. This time, Germany may infect the rest of the world as well. Regulators in the country are busy drafting prohibitions, and now also seem to target cryptocurrencies. A German economic and financial crisis would be a seismic event of global proportions, affecting all markets. The main question now seems to be when it will happen, not if.
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Biggest Drop In a Decade – German Industry Is Hurting
The industrial powerhouse of the Eurozone and the greater European Union is now seeing a significant decline in production – by 2.7% year-on-year in January and 1.9% in April compared to the previous month. Then in May, factory orders declined 2.2% from a month ago and registered an 8.6% annual drop, the biggest in a decade. In the first half of 2019, even beer sales were down 2.7%, according to Destatis, the Federal Statistical Office.
International trade wars and geopolitical uncertainty in the region and beyond are negatively affecting the German economy, which relies heavily on exports. They form almost half of the country’s annual economic output. Germany is Europe’s leading exporter of goods and it ranks third among the largest exporters in the world, after China and the United States.
Several factors have been hurting German exports which registered an annual decrease of 0.5% in April. Demand from China, which is a major market for German products, has been weakening due to slowing growth. U.S. tariffs on steel and aluminum are also a major concern and the Trump administration is now considering whether to impose
