After a series of awful figures from the Eurozone – the group of 18 European countries that are using the Euro as their official currency – the German government has just reduced its forecasts for its GDP growth both for 2014 and 2015. Between July and August 2014 Germany’s industry has recorded a fall of 4%, Business Insider reports.
The Eurozone’s economy has given out some very disappointing signals this year. The group’s industrial production has fallen 1.9 per cent this year up to August. Between July and August the drop of industrial production in the area has fallen 1.8 per cent, more than the economists have been expecting. The GDP growth forecast published by Germany, the European Union’s economic powerhouse, are also scary: they have reduced the forecast from 1.8% to 1.2% for 2014, and from 2% to 1.3% for 2015.
Germany’s index for the economic sentiment – ZEX – has fallen for the first time since 2012. For October it stands at -3.6, meaning that local investors are more bearish now than they were for the last two years. At an European level, the output levels are disappointing – they are below what they were four years ago, and more than a tenth below their peaks reached before the financial crisis. Even if industrial production rebounds in September, the Eurozone’s industrial sector will be back in recession.
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According to the Wall Street Journal, this fall registered in the industrial production of the Eurozone is ” the largest decline in the manufacture of capital goods since the months following the collapse of the Lehman Brothers (the fourth largest investment bank in the US, that has declared bankruptcy in 2008), and possibly reflecting similar decline in global business confidence”. Germany’s figures added to the concerns about the weak state of the Eurozone’s economy and its impact on the rest of the world, including the US.