Frankfurt - As one eurozone country after the next succumbs to the
fevers of the debt crisis, Germany - the region's biggest - seems so
far to have remained largely immune.
However, the latest data suggest that the robustness of
the German economy could now also be faltering, even as the Bundesbank
continues to give it a clean bill of health.
All of the key economic data last week surprised to the downside.
New car registrations - a gauge of demand in one of
the most important sectors of the German economy - dropped by 4.8% in May.
Industrial orders in Germany fell by a
bigger-than-expected 1.9% in April and industrial output was down
even more by 2.2%.
The monthly trade data disappointed too, with exports down 1.7% and imports dropping 4.8% in April.
For Germany's traditionally export-driven economy, such signs are worrying.
It already went briefly into reverse at the end of last
year, contracting by 0.2% in the final quarter. But it appeared
to shrug off the momentary downturn again quickly, expanding by 0.5% in the first three months of this year thanks to robust exports
and healthy consumer spending.
Nevertheless, with sentiment indicators - such as the
ZEW barometer of investor confidence and the Ifo business climate index - now firmly heading south, and one set after another of real economic
data failing to meet expectations, analysts are concerned that Germany's
run of good health is over.
The trade data in particular were a "clear signal
that the German economy is beginning to suffer from the effects of the
current crisis", said Newedge Strategy analyst Annalisa Piazza.
"Demand is fading, both domestically and externally," she warned.
Christian Schulz of Berenberg Bank said the drop in
exports should not come as a surprise, "given the continued recession in
some European export markets and the slowdown in emerging markets".
The sharp drop in imports, however, meant that the
second quarter "started on a weak note. The trade data confirm the
picture painted by industrial orders and production," the analyst said.
"German GDP (gross domestic product) growth in the
second and third quarters could thus turn negative again, before
rebounding towards the end of the year," Schulz concluded.
Commerzbank economist Ulrike Rondorf said the
resurgence in uncertainty from the debt crisis "is likely to contribute
to the German economy posting only slight growth overall in the coming
The economy ministry, too, is concerned that the euro crisis and slowing output worldwide pose growing risks for Germany.
"In the course of the second quarter, the risks for the
economic recovery have come more into focus. Both the indicators for
the real economy and survey forecasts have worsened," the ministry wrote
in its latest monthly report.
"Concerns over economic growth, especially in the
eurozone but also in the US or China, are becoming clearer day-by-day,"
the report added.
The general population is also worried.
A poll conducted by ARD public television found that
nearly four out of five Germans say the eurozone debt crisis will get
much worse before it gets better, even if a majority still believes the
single currency will survive.
Flying in the face of all this gloom and doom, however,
the Bundesbank upgraded its forecast for growth of the German economy
to 1.0 % this year from a previous prognosis of 0.6%.
The Bundesbank acknowledged the current "difficult
environment" and noted that demand for German-made goods from a number
of eurozone member states was suffering.
"At the same time, the global economy has regained its
footing and that means demand for German exports from countries outside
Europe is on the rise," it argued.
In addition, the domestic labour market was in good shape and the current low level of interest rates was also favourable.
"Our assumption is that expansive forces will retain
the upper hand as long the euro area debt crisis does not escalate,"
said Bundesbank president Jens Weidmann.
"All in all, the economic picture in Germany is a great deal more favourable than in most other European countries," he said.