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Germany on the slow train

Tuesday, October 07, 2014 - 01:20

German industrial output posts biggest drop since height of global financial crisis in early 2009. As Ciara Lee reports the latest figures, plus the IMF's downgrade of the country's growth outlook, raises questions about the strength of Europe's largest economy.

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Commuters brace for another strike - and this isn't France - it's Germany. Trains driver are staging a 9 hour stoppage. The GDL union is seeking a 5 percent pay rise and a shorter working week. It's not proving a great week for Germany. A second day of weak data sent European markets into retreat. This time it was industrial output - down 4 percent in August, mirroring Monday's biggest fall in five years for industrial orders. . The German economy and particularly its factories have been bruised by sanctions against Russia. Standard Chartered's Sarah Hewin says the data is cause for concern. (SOUNDBITE) (English) STANDARD CHARTERED SENIOR ECONOMIST, SARAH HEWIN, SAYING: "As long as that cease fire holds we hope that business confidence will return. And of course German exporters are going to be benefitting from the weaker euro. I don't think we can expect the government to step in any time soon with some sort of fiscal stimulus because there seems to be broad opposition from the government and indeed across German society." The timing of the German school holidays can shoulder some of the blame for the worse than expected data. But it still mounts up to an economy that is losing steam and could fall into recession. Combine that with a slow down in many of Germany's neighbours - and the euro zone has good reason to be nervous.

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