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Consumer fears hit Germany
Source: Agencies |
September 2, 2011, Friday
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Print Edition
Print Edition
WEAKER spending by consumers worried about Europe's debt crisis and the shutdown of eight nuclear plants were factors behind Germany's poor growth in the second quarter, the state statistics agency said yesterday.
Consumers spent 0.7 percent less, the first time the figure has dropped since 2009. The agency said this was due to fears over the debt crisis and higher energy prices.
European Union leaders are struggling to contain market turmoil fed by fear that some countries in the eurozone have borrowed more money than they can pay back. The EU is now saying that ups and downs on stock and bond markets are starting to affect economic trends outside, such as consumption and production.
Economist Timo Klein, of IHF Global Insight, said: "The key negative surprise was an unexpectedly large decline in private consumption."
He said unwillingness to spend was surprising because unemployment was low and consumer confidence surveys are down only slightly, while wages are growing.
"It appears that the negative impact of rising inflation on consumer purchasing power and the escalating eurozone debt crisis led to a sudden buyers' strike during the second quarter," he said.
Additionally, exports of electricity almost vanished after the shutdown of eight older nuclear plants because of safety fears after the Fukushima disaster in Japan.
Economist Andreas Rees, of UniCredit, said the nuclear shutdown nicked a quarter-percentage point from gross demestic product by cutting energy production by 8.8 percent. Chancellor Angela Merkel accelerated a planned exit from nuclear power after the tsunami and reactor disaster in Japan caused new fears about the industry.
Consumers spent 0.7 percent less, the first time the figure has dropped since 2009. The agency said this was due to fears over the debt crisis and higher energy prices.
European Union leaders are struggling to contain market turmoil fed by fear that some countries in the eurozone have borrowed more money than they can pay back. The EU is now saying that ups and downs on stock and bond markets are starting to affect economic trends outside, such as consumption and production.
Economist Timo Klein, of IHF Global Insight, said: "The key negative surprise was an unexpectedly large decline in private consumption."
He said unwillingness to spend was surprising because unemployment was low and consumer confidence surveys are down only slightly, while wages are growing.
"It appears that the negative impact of rising inflation on consumer purchasing power and the escalating eurozone debt crisis led to a sudden buyers' strike during the second quarter," he said.
Additionally, exports of electricity almost vanished after the shutdown of eight older nuclear plants because of safety fears after the Fukushima disaster in Japan.
Economist Andreas Rees, of UniCredit, said the nuclear shutdown nicked a quarter-percentage point from gross demestic product by cutting energy production by 8.8 percent. Chancellor Angela Merkel accelerated a planned exit from nuclear power after the tsunami and reactor disaster in Japan caused new fears about the industry.
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