According to Van Harn, even the data that Rabobank has been working with recently cannot be called very positive. Especially in industry, demand seemed to plummet and few new orders came in. “Especially from abroad,” explains Van Harn. “The Chinese economy is slowing down quite a lot, and this ultimately affects German exports and thus German factories.”
“China’s economy is slowing down and this will eventually affect German exports”
According to Van Harn, the fact that German investors are losing confidence can be seen as an “economic indicator”. The ZEW Institute checked with some 350 experts what their expectations are, “and in general this is a good indicator.”
Fear
According to French economist Olivier Blanchard, Germans are generally very quick to get nervous about high inflation, a holdover from postwar German hyperinflation. At an inflation rate of 1.9 percent, stress would already be in place, and this can be seen in consumer spending, according to Van Harn. “Although it applies to more countries than just Germany, Germany is a leader in this,” he says. ‘Over the last couple of quarters, you’ve seen consumer spending contract significantly. So cut a lot.’
And not just in consumer spending, he points out. It also has an effect on other parts of the economy. For example, the ECB has to raise interest rates, which means there will be less investment. “As interest rates are raised, the currency will get stronger,” Van Harn continues. ‘This in turn means that the export position suffers. So inflation actually affects the economy in many different ways. That’s why they didn’t do very well.’