After a stunning fall in German industrial orders for August – the 5.7 percent monthly drop was the largest since the global financial crisis raged in 2009 – industrial output for the same month has just plunged by 4.0 percent, also the biggest fall in five years.
After Europe’s largest economy shrank in the second quarter there had been hope of a pick-up in the following three months but the thrust of recent data suggests it will be lucky to achieve any expansion at all.
At the same time, the government – particularly finance minister Wolfgang Schaeuble – vehemently rejects calls from euro zone and G20 peers for greater efforts to get growth going.
That argument will doubtless be reprised at the G20/IMF meetings in Washington at the back end of the week. Given G20 finance ministers and central bankers met in Australia less than three weeks ago, it’s not hard to guess how the debate will go – most of the western world will urge the euro zone to do more to foster growth and Germany will warn against letting up on austerity.
Berlin is prepared to encourage private investment but not to spend public money. The focus in Europe has all been on the malaise in France and Italy. But at the moment, Germany doesn’t look much healthier. Will there come a point at which economic self-interest will overcome opposition to fiscal stimulus?