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China clouds euro zone outlook

Wednesday, October 14, 2015 - 01:40

Euro zone industrial production declined in line with expectations in August, as the energy sector reversed gains made in July. As David Pollard reports, China remains a big worry for Europe.

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Germany continues to grow and remains on track. Economy minister Sigmar Gabriel giving his spin on the latest official forecast. But the track, it appears, not quite as fast as hoped. Growth now seen edging downwards to 1.7 per cent this year, against 1.8 per cent previously. As for Germany's migrants crisis: it could be a boost. (SOUNDBITE) (German) GERMAN VICE CHANCELLOR AND ECONOMY MINISTER, SIGMAR GABRIEL, SAYING (on GERMAN ECONOMY): "For the refugees, the billions of euros we're planning to invest in education, kindergartens and schools will act like a small stimulus package." Many will welcome even a small loosening of Germany's fiscal purse strings. Latest figures from Spain confirm a picture of sliding prices - the euro zone apparently bogged down in a low-demand rut. While outside, China its own below-forecast inflation. CEBR economist, Vicky Pryce. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "If China sneezes - it's actually got a bit of a cold right now - then not only is Asia affected overall, but so are the advanced economies." And where it hurts most is manufacturing. Euro zone industrial production today reported to have shrunk in August. An economy in danger, says Pryce. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "If this deflationary environment continues, then that could be quite a disincentive in terms of people spending or, in fact, investing in anything." The UK recovery looks intact - its unemployment has unexpectedly fallen to its lowest level since 2008. But there too, inflation has edged into negative territory for the second time this year. Sinking prices not just a problem for the euro zone, alone.

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China clouds euro zone outlook

Wednesday, October 14, 2015 - 01:40