- Germany's Economy Ministry
German economic strength is questioned as industrial production plunged by more than economists had expected in August, adding to recent streak of negative data. Industrial output, adjusted to seasonal changes, plummeted 4% from July, when it rose 1.6%, the Economy Ministry reported. That is the sharpest drop since January 2009 and compared to market consensus of –1.4%. Germany's economy is losing momentum as sluggish growth in the Euro zone, its largest export market, and ongoing political tension with Russia weigh on business confidence. On top of that, factory orders plunged 5.7% in August, also the most since 2009, recent data showed. German manufacturing shrank in September, with new orders declining at the fastest pace since 2012. Business confidence measured by the Ifo research institute dropped to the lowest in almost one and a half years, while unemployment rose for a second month.
The International Monetary Fund revised downwards its 2014 German growth outlook to 1.4% from 1.9% previously, and its 2015 forecast to 1.5% down from 1.7%. The Euro zone's economy is expected to grow 1.3% next year, slower than the 1.5% pace predicted in July, after a 0.8% gain this year, the think-tank said. The Euro region is still set for a "modest economic expansion in the second half," even though risks remain on the downside, ECB President Mario Draghi said last week.
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