No Turnaround Yet for German Economy

Germany can be considered as the barometer for Europe since it has the largest economy in Europe. With a strong base in manufacturing and leadership position in industries such as chemicals Germany’s economy growth is critical for Europe as well the rest of the world.

In an article titled Germany’s Export Champions Slammed by Economic Crisis  Der Speigel says that there is no recovery yet in the manufacturing sector. Southern  Germany, home to many engineering and auto parts manufacturer, has been especially hit hard since they depend highly on exports.  Export orders have plunged anywhere from 30 to 50%.

From the article:

Is there any glimmer of hope? “I don’t think so,” says Peter Zimmermann, the CEO of Mink, a company based in the town of Göppingen near Stuttgart. A family business in its sixth generation, Mink is the world market leader in specialized industrial brushes. Zimmermann is incensed when he hears people say that the worst is over. “This isn’t a crisis,” he says. “It’s a catastrophe.”  (emphasis added)



Source: DerSpiegel

The GDP contracted sharply as shown in the graph below:

Source: Federal Statistical Office

The GDP in 1Q,2009 was 3.8% lower then the GDP in 2008 for the same period and the downtrend acclereated relative to 4Q, 2008.

Foreign Trade

Source: Federal Statistical Office

Related ETF:
iShares MSCI Germany Index (EWG)

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