MOSCOW, October 9 (RIA Novosti) – Recovery in the Eurozone is faltering as Thursday’s data have shown a sharp decrease on exports from Europe’s two leading economies, Germany and France.
The German Federal Statistics Office announced Thursday that the nation’s exports have fallen by 5.8% in August, which is the biggest drop in 5 and half years, as reported by Reuters. Among the reasons for such decline are the overall Eurozone weakness, external shocks and turmoil in foreign countries, and summer holidays that contributed to decrease in imports as well. The nation’s industrial output has also slightly shrunk, as evidenced by the data published earlier this week. Germany’s foreign trade surplus has decreased to 17.5 bn euros from 22.2 bn euros in July and fallen short of the projected 18.5 bn euros.
However, the main concern for Germany is economic growth. Earlier this week the IMF has lowered forecast for Germany to 1.4% from 1.9% in 2014, and to 1.5% from 1.7% in 2015. The government of Chancellor Angela Merkel abstains from stimulating economic growth by infrastructure investment because of the fiscal target to reach a fully-balanced budget in 2015.
In France exports dropped by 1.3%, and the nation’s foreign trade deficit has reached 5.8 bn euros, as reported by Business Insider. The driving force of the French economy is domestic consumption, which is at its 18-months’ lowest, and President Francois Hollande in more concerned about raising competitiveness of the nation’s industries than boosting exports.
"Of course, the cooling of many export destinations combined with increased uncertainty stemming from the Ukrainian crisis look like the main drivers of the slowdown but in our view fall short explaining the entire story", said ING DiBa economist Carsten Brzeski as quoted by Business Insider.
