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German economy on the edge

Germany is the world’s fourth largest economy.  It is also the third largest exporter; and the powerhouse behind what little growth there has been in the Eurozone economy.  But according to Business Insider there are signs that the Germany is slowing to a halt… with potentially catastrophic results for the wider European economy:

“The country must export vast amounts to maintain social and political stability.  With global demand weakening since 2008, we are seeing a generalized crisis for exporters.

“However, one country that has not yet experienced the effects of this crisis is Germany… While other major exporters have been struggling, Germany has actually increased its export levels.   Germany has thus created a significant vulnerability for itself and will be the next country to face an export crisis.”

According to Business Insider there are three troubling indicators that do not bode well for the German economy:

  • The global slowdown has caused German export growth to slow significantly
  • Return on capital investment has fallen dramatically for major German firms
  • German exporters are cutting prices in order to maintain market share.

“Germany is not yet in crisis, and many German companies are still sporting at least steady returns. However, the earnings reports of some large German companies and Germany’s export data signal that the country has painted itself into a corner with no way out.”

Since Germany has been the one European country to buck the low growth trend since 2008, these indicators suggest a grim future for the European economy.

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