German institutes slash growth forecast as industry orders tumble

Credit: Reuters Studio
Published on April 4, 2019 - Duration: 01:34s

German institutes slash growth forecast as industry orders tumble

German industrial orders, hit by a slump in foreign demand, fell at their sharpest rate in more than two years in February.

As David Pollard reports, the numbers came as Germany's leading economic institutes cut their 2019 growth forecast by more than half.

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German institutes slash growth forecast as industry orders tumble

Germany's conveyor belt of growth is slowing - and slowing fast, according to new data.

It shows February industrial orders falling at their sharpest rate in more than two years.

Contracts slumped by 4.2 per cent - when a rise was expected.

Foreign orders were down six percent.

And the months ahead, says the economy ministry, will be 'subdued' .... One analyst described the numbers as 'awful' - amid the global risks the IMF listed this week.

(SOUNDBITE) (English) IMF MANAGING DIRECTOR, CHRISTINE LAGARDE, SAYING: "Country-related uncertainties such as Brexit, for instance, and broader uncertainties such as high debt in some sectors in some countries, tension around trade policy still uncertain." World trade - the WTO added on Wednesday - shrank by 0.3% in the fourth quarter of 2018.

It's likely to grow by only a modest 2.6% this year.

Germany narrowly skirted recession at the end of last year.

And on Thursday, its own forecasts too were slashed.

(SOUNDBITE) (German) ECONOMIST AT THE HALLE INSTITUTE FOR ECONOMIC RESEARCH (IWH), OLIVER HOLTEMOELLER, SAYING: "We expect for the year 2019 an increase in gross domestic product of 0.8 percent." In other words, less than half its previous estimate.

For stock markets, the news dealt a second dent to confidence.

European and Asian shares slipped back from eight-month highs - as optimism over US/China trade talks also ebbed away.

The German government updates its forecasts later this month.

But one economist warned that - quote - 'the long-term upswing of the German economy has come to an end".

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