Germany: second consecutive month of worsening economic climate. Exports no longer solve German problems
Germany's Ifo Business Climate indicator, which tracks businessmen's economic expectations fell for the second consecutive month to 88.5 in June 2023, its lowest level since last December and well below market expectations of 90.7.
The recent decline underscored the lingering uncertainty surrounding the recovery of Europe's largest economy, with manufacturers signaling a drop in new orders due to the dampening effect of global interest rate hikes on demand. Expectations for the coming months have become significantly more pessimistic (83.6 versus 88.3 in May), while companies' assessments of their current situation have also become more negative (93.7 versus 94.8). By sector, sentiment worsened among manufacturers (-9.9 vs. -0.6), service providers (2.7 vs. 6.8), traders (-20.2 vs. -19, 1) and manufacturers (-20.1 vs. -18.5). Here is the related graph
In the last thirty years, Germany has relied, in moments of economic slowdown, on the export of the prestigious Made in Germany to be able to lead an economic recovery. Whenever there was a problem, advanced chemical products, automobiles, commercial vehicles, mechanics were exported, with good quality products and acceptable prices, above all due to the compression of internal wages.
Now this mechanism is faltering: China is not the previous growth market, and in any case the EU wants "decoupling". Russia is no longer a growth market and so are Belarus and Ukraine, for different reasons. South America looks towards Beijing and the USA slows down. Germany this time will have to look inward to overcome the moment of difficulty.
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The article Germany: second consecutive month of worsening economic climate. Export no longer solves German problems comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-secondo-mese-consecutivo-di-peggioramento-del-clima-economico-lexport-non-risolve-piu-i-problemi-tedeschi/ on Mon, 26 Jun 2023 14:15:15 +0000.