Is Germany the Donkey of Europe? Latest Economic Data Suggests Rough Road Ahead

A Weak End to the Year

Well it looks like Germany is the latest "sick man of Europe". The latest economic data is out and things are not looking good. Factory orders exports and industrial production all took a hit in 2023 indicating a weak end to the year. If Germany were a character in the Shrek movies it would definitely be Donkey right about now – down on its luck and making everyone around it feel a little uncomfortable.

Industrial Production Takes a Dive

Oh boy industrial production in Germany declined by a whopping 1.6% in December alone. And for the year as a whole it was down 1.5%. Ouch! Don't they know that in the land of Far Far Away we don't settle for anything less than excellence? Looks like Germany needs a little fairy dust to get its production back on track.

Exports Face a Bumpy Ride

Exports are a major pillar of the German economy but they took a big hit in 2023. In December exports fell by 4.6% and for the year they were down 1.4%. That's a lot of euros flying out the window! Germany needs to find a way to turn this ship around or else we might as well start calling it the "sick donkey of Europe".

Factory Orders: A False Glint of Hope

At first glance it seemed like there was a glimmer of hope for Germany's factory orders. They saw an 8.9% increase in December compared to November. But as they say looks can be deceiving. This growth is nothing to get excited about. In fact if we exclude those pesky large scale orders factory orders actually fell to a post pandemic low. Talk about a buzzkill! Looks like Donkey's dreams of becoming a famous actor are fading away just like Germany's hopes for a strong recovery.

Purchasing Managers' Index: A Faint Beacon of Light

Hold on a second there might be a glimmer of hope after all. The most recent Purchasing Managers' Index report suggests that the worst may be over soon in Germany's manufacturing sector. It edged up to an 11 month high although it's still below the line that divides growth from contraction. But hey at least it's a step in the right direction. Maybe Germany will find its happily ever after after all!

A Bumpy Road Ahead

Donkey's not feeling too optimistic about Germany's economic growth. Erik Jan van Harn from Rabobank says we're still a long way from the pre pandemic days of booming activity. He predicts a modest contraction in the first quarter with a slight pickup later on. But overall it's looking like a flat year for Germany. Looks like Donkey will have to keep searching for those waffles elsewhere.