A collapse in exports pushed Europe’s largest economy to the brink of recession in the second quarter of this year.
In a sign that an increasingly hostile trade dispute between the US and China is at least partially to blame for Germany’s deepening manufacturing malaise, shipments abroad declined 1.3 percent, the most in more than six years. That led to a contraction in total economic output — the second over the past year.
Weaker global trade and upheaval in the auto industry are dragging Germany’s economy deeper into trouble, with repercussions for the broader eurozone economy.
Plunging business confidence and warnings from some of the country’s biggest companies are adding to concerns about the outlook and piling pressure on German Chancellor Angela Merkel to provide fiscal stimulus.
Collateral damage from a US-inflicted trade conflict could soon intensify. US President Donald Trump threatened to impose tariffs on European car imports earlier this month and labeled the EU “worse than China.”
In an attempt to defuse tensions, Merkel on Monday said that she wants the bloc to start trade talks with the US.
The 0.1 percent contraction in the second quarter matched the initial estimate earlier this month. Net trade subtracted 0.5 percentage points from total output, more than offsetting gains in private as well as government consumption. Construction shrank after strong growth at the start of the year and investment contracted slightly.
German companies, including Henkel AG and Continental AG have blamed geopolitical uncertainty and trade for a weaker outlook.
Many firms have highlighted difficulties in predicting earnings prospects.
Adding to the challenge, weakness in manufacturing is starting to spread into other industries, said Clemens Fuest, president of the country’s Ifo institute.
The think tank’s closely watched business confidence indicator this month slid to the weakest level in almost seven years.
The economy’s disappointing run has amplified calls for fiscal stimulus. While the German Ministry of Finance is studying options — to be deployed in case the crisis worsens — so far, the government has defended its policy of a balanced budget.
With private spending still relatively robust thanks to a solid labor market, the Bundesbank has also cautioned against any knee-jerk reactions to a downturn driven by external demand and following years of strong growth.
Jens Weidmann, the institution’s president, said over the weekend that “there’s no reason to panic.”
He also sought to lower expectations for a big package of measures from the European Central Bank, arguing against a new round of quantitative easing.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day