Germany’s Economy Growth Hit Hard by Ukraine Crisis

Bobingen industrial park near Munich, Germany

Bobingen industrial park near Munich, Germany

Germany’s financial growth is more likely to dwindle in the second quarter, mainly due to instability brought on by the crisis in Ukraine and the Middle East. The crisis has now led to a halt in growth in industrial output and exports amid a “very hesitant” recovery in the euro zone, the Economics Ministry warned on Tuesday. With the emergence of geopolitical tensions, especially in Easter Ukraine and Western countries sanction forced on Russia, have now resulted into reductions in orders for industrial merchandize as well as output and sales in the second quarter, the Ministry announced in its monthly report for August. “The uncertainty should currently weigh more heavily than the direct effects of the imposed sanctions measures,” the ministry said. The ministry has cautioned for a few months that the growth would be moderate in the euro zone’s greatest economy in the second quarter after the winter’s surprisingly mellow climate helped solid terrible local product growth of 0.8% in the initial three months of the year. The forewarning comes as data made public on Tuesday by the Center for European Economic Research, or ZEW, indicated estimation for the Germany economy declined for the eighth month consecutively. Estimates tumbled to 8.6 in August from 27.1 in July, the lowest since June 2012 and its least level since December 2012. The country’s economic performance has turned into a worrisome topic along with the slowing economic activity in rest of the Europe and other parts of the world. The IEA energy watchdog said earlier that world oil demand will climb short of what was previously estimated in 2014, because of a lower viewpoint for worldwide economy and interest development in the second quarter tumbling to its most minimal level in more than two years. According to a report released by the Organization for Economic Cooperation and Development, economic growth is prone to remain weak in Germany, thereby obfuscating the stance of optimistic euro zone’s recovery. “It will still take until Thursday before the hard facts will be presented but based on all available data the German economy should have stagnated. A stagnation as such is no reason to get overly concerned. Contrary to a common belief, any stagnation of the economy was not so much the result of crisis in the Ukraine and European sanctions on Russia,” said ING analyst Carsten Brzeski. “Instead, the stagnation should have been rather homemade. Or better: homemade and Eurozone-made. The reversal of the mild-weather-effect on the construction sector, an unusual amount of holidays in May combined with ongoing problems in France and Italy should have been the main drivers of the slowdown of the German economy.” The estimate for second-quarter GDP growth will be released by Germany’s statistics office on Thursday.

Carrie Ann
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Twitter, Facebook

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