Thursday, June 19, 2003

Germany's Fall Looks More Like a Tumble

The bad news from Germany continues. This provokes speculation of another rate cut (which there should be, please!!) and some 'now you see me now you don't' shuffling from Duisenberg.

German industrial output fell sharply in April, fuelling mounting concern over the fragile state of the eurozone's largest economy and increasing pressure on the European Central Bank to cut rates again soon. Production dropped by a bigger than expected 1.0 per cent in April after declining by a revised 0.1 per cent in March, the economics and labour ministry said on Wednesday. The fall in output, triple what had been forecast by private sector economists, was driven by a 1.1 per cent drop in manufacturing, hard hit by the soaring euro, and a 0.6 per cent slide in construction output. Economists said concern over the slowdown in Germany was deepening amid fears stagnation in what was once regarded as the engine of European growth could soon infect the other big eurozone economies. France and Italy are already feeling the drag of the German economy, which is technically in recession after two quarters of contraction. It is expected to shrink again in the second quarter of this year and show growth of little more than zero for the full year, depressing eurozone growth prospects further.
Source: Financial Times

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