EKIP– Expert Club for Economics and Politics A Different Opinion
(Click on the infographic for a larger size)
Data source: NSI
After a sharp slowdown in growth in May, the latest NSI data show that industrial production and sales completely collapsed in June. Both production and sales are at record levels of decline for the last 5-10 years, depending on the specific indicator. As I mentioned in my commentary last month, the surprising resilience of industrial sales growth in the foreign market in the previous months was doomed in view of the weakness reported in the industrial sectors of key foreign markets such as Germany.
It is Germany that is most likely the main culprit for the collapse of our industrial sales and, consequently, production. Europe's largest economy also reported a particularly serious decline in its industrial production growth in May, unseen in the last few years (in fact, at least since the end of the Euro crisis). This has fueled fears even more strongly that a recession is knocking on the door of the German economy. And from there – of the rest of Europe.
As I have mentioned before, the member states of the European Union, especially peripheral countries like Bulgaria, are particularly dependent on the German market because it is the most significant destination (or one of the 3 most significant) for their exports. If demand for export goods there collapses, this will cause a collapse in exports of all other member states, especially smaller ones like Bulgaria. In the future, we must continue to carefully monitor developments in German industry, but the trend since the end of 2018 is clear and distinct – the probability of a recession is becoming greater.
