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Surprise 1% Fall In German Second-quarter Gdp

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http://www.ft.com/cms/s/0/60fff408-62de-11...00779fd2ac.html

Surprise 1% fall in German second-quarter GDP

By Bertrand Benoit in Berlin

Published: August 5 2008 12:37 | Last updated: August 5 2008 12:37

The German economy contracted by 1 per cent in the second quarter, twice as fast as economists were anticipating, government officials told the Financial Times on Tuesday.

The surprisingly bad quarter-on-quarter figure is the clearest sign to date that Germany’s robust recovery is coming to an end. It will add to recent doubts about the ability of Europe’s largest economy to withstand international economic turbulence, adverse currency movements, high commodity prices and a stubbornly weak consumption at home.

“The contraction will be in the order of magnitude of minus 1 per cent,” said a government official who declined to be identified. “Bear in mind, though, that this is partly a correction after the exceptionally good first quarter.”

The Federal Statistical Office, which will publish initial second-quarter gross domestic product figures on August 14, and the economics ministry, which compiles the government’s own growth estimates, both declined to comment.

Economists were surprised by the steep dive in output. Dirk Schumacher, at Goldman Sachs, who had forecast a 0.5 per cent contraction, said: “This would be surprising. This would show a disappointing underlying momentum… Germany is now showing signs of real weakness.”

Elga Bartsch, at Morgan Stanley, who was forecasting a 0.4 per cent fall in GDP, said: “I was expecting growth this year of 2.3 per cent. But if this [second-quarter figure] is confirmed, I will probably end up below 2 per cent.”

Surprisingly robust growth of 1.5 per cent in the first quarter, partly attributed to an unseasonally warm winter, had led analysts to anticipate a downwards correction in the three months to June, albeit of a smaller magnitude.

A partial consensus estimate on Monday by Reuters, based on a poll of seven analysts, showed average GDP expectations for the second quarter at minus 0.5 per cent.

But recent signs – including disappointing business confidence survey and, in May, the sharpest drop in industrial production in 10 years – have suggested that Germany’s two-year long recovery was losing steam fast.

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The world economy looks like coming to a crashing halt.

If this is happening in Germany and the vast opinion here is that they are in a far better position than us, WTF is going to happen to the UK!!!!

It's not an opinion I've ever much gone for. Whilst it may be noble to still 'make things', it's not exactly flexible. A 10 person 'creative consultancy' may be filled with loathsome people called Justin and Nathan who deserve to be boiled in oil just for existing but it's more able to adapt to rapid change in its environment than a 200,000 person car making behemoth. Same goes for financial services - love them or hate them, banks and the like can re-arrange themselves a lot quicker than, say, mining companies.

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That is a shock - I though Germany would have been one of the best-placed economies to withstand the downturn.

Or maybe not, since they are so heavily reliant on exports.

And yes, I think the Germans are much less prone to fiddling with their GDP figures than either the UK or US.

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That is a shock - I though Germany would have been one of the best-placed economies to withstand the downturn.

Or maybe not, since they are so heavily reliant on exports.

And yes, I think the Germans are much less prone to fiddling with their GDP figures than either the UK or US.

So if you're reliant on exports, like Germany, you're f***** and if you're reliant on imports, like us, you're f*****. What's the answer? :o

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It's not an opinion I've ever much gone for. Whilst it may be noble to still 'make things', it's not exactly flexible. A 10 person 'creative consultancy' may be filled with loathsome people called Justin and Nathan who deserve to be boiled in oil just for existing but it's more able to adapt to rapid change in its environment than a 200,000 person car making behemoth. Same goes for financial services - love them or hate them, banks and the like can re-arrange themselves a lot quicker than, say, mining companies.

Having said that for decades the mittelstand was held up as a model of smallish-scale flexibility.

Granted, financial services are the most flexible of all professions - including the oldest :unsure: - but when trust is gone, it's gone.

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They will be rolling on their stockings, strapping on those high heels and singing a few songs from 'Cabaret' whilst polishing up those panzers that I have always suspected that they have hidden in their garages.

Joking aside, if I was a German I would be thoroughly cheesed off now. Of all the global economies they have done the least harm to themselves in the 10 year credit bubble and now they are going to suffer with everyone else because of the Euro.

Oh dear.

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They will be rolling on their stockings, strapping on those high heels and singing a few songs from 'Cabaret' whilst polishing up those panzers that I have always suspected that they have hidden in their garages.

Joking aside, if I was a German I would be thoroughly cheesed off now. Of all the global economies they have done the least harm to themselves in the 10 year credit bubble and now they are going to suffer with everyone else because of the Euro.

Oh dear.

Oh dear a Sampson event...... and I was thinking of going overseas to hide for a bit while it all blows over too...

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  • 396 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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