Stagnation Stress German Exporters Expect Bleak Future
Companies in Germany that rely on exports are becoming increasingly concerned about the future of the country's economy, according to a new industry survey. The downturn in optimism is yet another indication that Europe may be in for a period of extended stagnation.
In April, Germany's central bank, the Bundesbank, was optimistic. Springtime would bring a rapid recovery from the winter blues and an increase in investment, it said. "Business activity expectations for the German economy have recovered quickly and strikingly in the last three months," the Bundesbank wrote in its report.
The bank's optimism, however, may have been a touch premature. German exporters are becoming more pessimistic as the spring progresses. On Thursday, the Association of German Chambers of Commerce and Industry (DIHK) released the results of a survey showing that companies dependent on exports are much less optimistic than a short time ago. While 30 percent still expect overseas turnover to rise, one in eight believe it will fall.
"Exports are likely to develop less dynamically in the coming months," the DIHK writes in the report, which is based on survey of 25,000 companies.
The new report comes at a time when many are forecasting an extended period of stagnation for the euro-zone economy. Last week, the European Union statistics office released growth numbers for the first quarter of this year indicating that nine of 17 member-states of the common currency zone are now in recession, with the zone as a whole shrinking by 0.2 percent in the first three months of this year. Germany's economy, while showing growth, is hardy robust, expanding by a mere 0.1 percent from January to March. With several bloc economies mired in debt and economy malaise, the future is murky.
'Dangers of Half-Measures'
Mark Carney, outgoing Bank of Canada governor, who is heading across the Atlantic to become head of the Bank of England on July 1, became the latest Cassandra earlier this week. In his final speech as Canadian central bank chief, Carney said of Europe: "Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens." He added that: "Europe can draw lessons from Japan on the dangers of half measures."
The DIHK on Thursday also lowered its own expectations for German economic growth, sinking its prognoses for the entire year from 0.7 percent to a paltry 0.3 percent. "The German recovery has been postponed," said DIHK head Martin Wansleben in Berlin. In addition to concern about exports, Wansleben also noted the unusually cold late-winter weather in March.
Some 41 percent of German companies that took part in the survey said that weak foreign demand was the primary risk facing their businesses. "The uncertainty hasn't been this great since 2010," the DIHK said.
cgh -- with wire reports