German Industrial Orders Continue To Slide

The negative impact of Global trade conflicts on German industry is growing. Since the second half of this year (2019), orders have been worse than expected. According to the German Federal Statistical Bureau preliminary data, in July 2019, processing industry with 24 industries across the world, the order volume decreased by 2.7% compared with the previous month, compared with the same period in the previous year, a decrease of 5.6%, a decrease of more than that of experts.

The German Federal Ministry of economic affairs commented that new orders moved towards the third quarter of this year with a weak performance. In view of ongoing international trade conflicts and conservative business expectations, there is no sign of improvement in the industrial sector in the coming months. Foreign orders were weak in July, especially outside the eurozone. Domestic demand has also weakened, but the reduction is less than that of foreign countries.

Thomas Gitzel, chief economist at Liechtenstein's VP bank, believes that Germany's manufacturing industry will continue to suffer. This development trend will significantly increase the likelihood of German economy falling into recession. Carsten Brzeski, chief economist of ING bank, has similar assessments of the situation. When the economy contracted for the two consecutive quarter, economic experts regarded it as an economic downturn.

Following the slight decline in Germany's economic performance in the second quarter of this year, Germany may fall into a moderate decline in the summer. Due to the lack of economic growth, the government has discussed the fiscal expansion measures to stimulate prosperity, such as tax cuts for small and medium-sized enterprises, R & D subsidies, artificial intelligence and digitalization. And because the economic downturn will have an impact on most of the eurozone, the ECB is expected to further relax its monetary policy.