Germany's shrinking GDP is raising fears of a euro zone recession
Germany contracted, a week after the UK economy reported going into reverse.
qz.com
Article: German GDP shrunk 0.1% in the second quarter, data out today show, raising fears that the country is about to enter a recession and that a slowdown in euro-zone growth is here to stay.
...and was driven by a slowdown in trade—exports dropped more than imports—and construction, according to the country’s Federal Statistics Office.
Some economists and the powerful Federation of German Industries, which represents 100,000 companies in the country, are urging chancellor Angela Merkel to enact looser fiscal policies to kick start the economy. She dismissed the idea of fiscal stimulus yesterday.
And now for the "it's just getting started":
Europe Will Be Next To 'Go Trump' On China If This Keeps Up
China is rediscovering the EU. Exports there are up while EU manufacturing, mainly Germany, is in decline. Ut oh...
www.forbes.com
Article: Thanks to the trade war, China manufacturers are reorienting some of their sales towards Europe. Exporters in China are now looking to the European market as the key market to replace the U.S. Firms have lowered prices and ramped up production of EU-bound goods, one source who was not talking on the record told me.
Europe remains the main source of China’s external demand since the trade war went into high gear last September. Exports to the EU are up around 5% year-to-date.
Here’s the kicker: Nowhere in Europe is the economy growing even half that fast. Manufacturing is also in decline.
It costs money to save money in countries like Germany. Negative yields are now commonplace, even on junk bonds. Investors in equities are doing no better. Over the last five years, the FTSE Europe and the MSCI Germany indexes are down roughly 9% while the S&P 500 is up 45%. MSCI China is up a little over 9% in the same period.
I highly recommend reading the whole Forbes article.
To sum things up though; China is making up for lost US trade by aggressively moving into the European market (not that they have any other options) and that is going to exacerbate all the already extant fault lines in the EU and european economies.
