MOSCOW, August 6 (RIA Novosti) - German factory orders hit their lowest point since September 2011, illustrating the effects of heightened geopolitical tensions following the introduction of anti-Russian economic sanctions by the West.
Wednesday’s release by Germany’s Federal Statistics Office says “New orders in manufacturing in June 2014 decreased [by] a seasonally and working-day adjusted 3.2% on May 2014”.
Bloomberg reports that the downturn is a “sign that geopolitical tension with Russia is leaving its mark on Europe’s largest economy.”
“Geopolitical tensions, which have intensified again in July and showed in the latest set of Ifo business climate, could furthermore dampen the momentum,” Evelyn Herrmann, a European economist at BNP Paribas in London, told Bloomberg.
Earlier in July, the Bundesbank named geopolitical concerns as a principal reason for Germany’s GDP stagnation in the second quarter of 2014. However, factory orders are not the only declining economic indicator in Europe’s top economy. In July, business confidence in the country continued its decrease for third consecutive month, and is now at its lowest level since October 2013, according to Ifo (Institute for Economic Research) estimates.
One of the biggest defense equipment manufacturers in Europe, Rheinmetall, is among those facing direct political action against its business interests. On Monday, German Vice Chancellor Sigmar Gabriel blocked a $134 million deal between the group and Russia’s Defense Ministry. Rheinmetall had agreed to build a combat training facility in Russia, with an annual capacity of 30,000 troops. The company can now file a lawsuit against the government.
A new round of economic sanctions against Russia was introduced by Brussels on August 1. The restrictions complicate access to European capital markets for a number of top Russian banks.
