After being let off the hook in the third quarter of this year, experts are predicting the German economy will enter a trying period as growth has dipped to its lowest ebb for one and a half years.
According
to Markit Economics, a leading provider of global financial information, a
purchasing gauge for manufacturing and services fell to 51.6 at the end of last
month compared with 51.8 in December.
A
measure for factories jumped to 51.3 from 49.4 marching across the 50 point mark
that technically defines a contraction of the economy. A similar service gauge
fell.
Europe’s
biggest economy appears to have had a mediocre end to the year but economists
at the Bundesbank are optimistic for the future. Asset purchases by Europe’s
central bank could increase in response to lack of growth in the euro zone as a
whole and minimal inflation.
Other
observers in the field are more cautious. James Coleman, Managing Director and
co-head of Portfolio Trading at Softbank CIBC International said “When you look
at the most recent reports, the GDP growth looks extremely soft. If the figures
continue to go this way then the start of next year could usher in a time of
mini-recession”
Coping with competition
Another
factor clarified by the report was the seeming slide in profits from major companies
for the second month in a row, who have cited a decrease in capital investment
and a jump in competition from smaller firms.
The
European Central Bank (ECB) will be looking to boost the economy with major
asset purchases and a spokesman said that “everything apart from gold” is being
considered. Partnered with this stimulus will be the welcome oil price decreases
which will offer some mild relief for German consumers.
Data for
France and the euro zone itself will be released today, and economists are
expecting a similar pattern as they have seen in the German reports.
