Industrial orders in Germany dropped more than expected in August on weaker domestic demand on Monday, indicating that a manufacturing slump is pushing Europe’s largest economy into recession.
Economy Ministry said that the contracts for “Made in Germany” goods fell 0.6 percent from the previous month, while the demand for capital goods down by 1.6 percent.
“The German economy is in the midst of a recession. Today’s data make that clear again. The German government will probably come under growing pressure to give up its strict budget policy”Thomas Gitzel, an economist at VP Bank Group
The economy shrank by 0.1 percent in the second quarter, and recent data shows continued weakness in manufacturing in the third quarter. The government has so far stuck to its balanced-budget policy, in spite of pressure from economists and other governments to spend more to boost flagging demand.
Factors such as trade disputes between China and the United States and Britain’s planned but delayed exit from the EU are slowing the world economy and increasing business uncertainty.
Germany’s finance minister Olaf Scholz said last week that Germany would be able to cope with an economic crisis but he did not expect the downturn to be as bad as it was in 2008/09.