German exports registered their steepest annual decline in three years in June, underscoring the plight of the manufacturing sector as global trade tensions escalate.
Shipments abroad fell 8 percent from the previous year, the most since July 2016.
Imports, a gauge for the strength of the domestic economy, fell an annual 4.4 percent.
Strains are also showing in France, where industrial production plunged in June.
The data add to evidence that export reliant businesses are hurting badly, threatening to bring Europe’s largest economy to a halt.
Once a growth driver in the region, Germany is forecast to expand a mere 0.5 percent this year, with only Italy seen faring worse.
There are few — if any —- signs of imminent improvement. The US and China, two of Germany’s key trading partners, remain locked in a war over import tariffs.
The former recently announced its biggest hike in levies yet, prompting the latter to respond by allowing its currency to tumble to its lowest value in more than a decade.
Germany is caught in the middle. Big name companies — including Continental, Daimler, BASF and Lufthansa — have slashed their outlooks in recent weeks amid global geopolitical uncertainty.
Economists at Commerzbank predict that China is on the cusp of a more fundamental shift in how it is running its economy, with repercussions also for Germany and the eurozone.
“There is much to suggest that China is taking the ‘Austrian’ path, accepting a protectionism-induced reduction in economic growth, and refraining from massively increasing the economic stimulus package which so far has had little effect,” Commerzbank chief economist Joerg Kraemer wrote in a note.
The bank lowered its forecasts for economic growth in Germany and the eurozone for next year to 0.8 percent and 0.7 percent respectively.
Industrial production is already suffering across the region. In France, output dropped 2.3 percent in June from the previous month, the most since early last year.
In Germany, production registered its biggest annual decline in nearly a decade, and receding confidence indicators are feeding speculation that the economy may be headed for a recession.
Second-quarter data GDP data are due on Wednesday next week, with economists surveyed by Bloomberg forecasting stagnation.
So far, the German government has been reluctant to react, saying additional fiscal stimulus is not needed. This stance means the nation’s current-account surplus, which has drawn criticism from US President Donald Trump and the IMF, would remain significant. It widened to 20.6 billion euros (US$23.1 billion) in June.
European Central Bank President Mario Draghi last month said that it is “unquestionable” that governments will need to pitch in if conditions keep deteriorating.
Policymakers have signaled that they could provide more monetary stimulus as soon as next month.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s