German and Spanish economies turn down

I noted last month that German industrial production fell 2.4% in May, and that Chancellor Angela Merkel was expecting ‘a significant fall’ in economic growth for 2009. This fall now seems to be already underway. Industrial output fell by a further 2.9% in June, and for the seventh month in a row – the longest period of decline for nearly 20 years. German officials are also indicating that GDP fell by around 1% in Q2.

The specific problem in Germany is a lack of export orders. In Spain, the economy is also facing recession, as housing market problems spread to the wider economy. Manufacturing output fell 9% in June, and H1 industrial output was down 3.1%. As a result, the Bank of Spain is now forecasting GDP at 0% for 2008.

A multi-year global downturn seems more and more likely, as the major Western economies all appear to be running out of steam simultaneously.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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