German Economy Sputters as Euro Zone Crisis Bites!

• German economy sputters as euro zone crisis bites! 
  By Michelle Martin and Sarah Marsh, http://www.reuters.com/ 
  (Reuters) – German industrial output fell more than forecast in September and the government’s economic advisers said the economy would grow by just 0.8 percent this year and next as Europe’s largest economy gets dragged deeper into the euro zone crisis.
  –
  Recent data from Germany, Europe’s growth locomotive and paymaster, has been largely disappointing, with business sentiment worsening, the private sector contracting, joblessness rising and industrial orders falling at their sharpest rate in a year, though consumer morale has held up and exports have leapt.
  –
  Wednesday’s data added to the gloom, showing that industrial production dropped by a hefty 1.8 percent on the month in September, well below the consensus forecast in a Reuters poll for a 0.5 percent drop.
  –
  “The euro zone crisis is hitting the domestic economy. German companies seem to be less and less inclined to invest and that points to the economy contracting in the fourth quarter,” said Stefan Schilbe at HSBC Trinkaus.
  –
  Economic advisers to the government, traditionally known as the “wise men”, dampened spirits further by forecasting growth of 0.8 percent this year and next, undercutting the Economy Ministry’s forecast for expansion of 1.0 percent in 2013.
  –
  “The low-point of economic momentum in Germany will probably be reached in the fourth quarter,” the advisers wrote in their annual report. “We expect the German economy to pick up some steam again during 2013.”
  –
  Germany may have managed to consolidate its budget well this year but it cannot rely on strong tax revenues and “special factors” such as low interest on debt, the advisers warned. Moreover it will likely have to contend with rising spending in the future due to an ageing population.
  –
  read more!

end