The latest IMF World Economic Outlook came out last week. It has lots of interesting remarks on the European austerity. Remarkably enough, it poses the problem of timing: fiscal consolidation, if too hasty, may end up being counterproductive. I played a little with the data accompanying the report, including the forecasts.
Last week, among the many bad news for the eurozone, one was in my opinion not sufficiently commented: in September industrial orders in Germany dropped considerably. What is particularly interesting is the source of this drop:
Both foreign and domestic orders declined this time. Orders from outside Germany were dragged 5.4 lower overall by a 12.1 percent plunge in orders from elsewhere in the 17-nation eurozone.
This news is hardly surprising. The latest forecasts from the European Commission confirm what seemed obvious: the wave of fiscal consolidation, largely dependent on the intransigent stance of Germany, is killing European growth. And not too much help can be expected from the United States.
This time it looks like Germany will not be able to export its way out of the crisis, and will have to find growth domestically. If only they resolved to do so, it would be great news for the rest of us as well…