ETF Trends
ETF Trends

Germany’s economy depends heavily on its exports and with the slump in auto sales, the economy and exchange traded fund (ETF) are looking bleak.

As the world’s number one exporter, Germany has relied for years on the sale of cars, precision parts, fine watches and a host of other products to fuel its economy, reports Henry Chu for The LA Times.

As the roving financial crisis spreads worldwide, more consumers and companies are hoarding their money rather than spending it. Industries across Europe that expected strong sales growth this year are frozen, as the economy has been scarred by uncertainty. Germany did pass a stimulus package last week, however, to stem the tide.

A normally frugal Germany has just learned to spend after a few years of stronger than expected growth. But after free spending similar to the united States and Britain, Germans are now forced to close their wallets. The first industry to feel the pain is the auto industry, which serves as a bellweather for the rest of the economy. A car is the most expensive item most Germans will ever own, as many rent their homes.

Meanwhile, figures released this week show German car exports fell in October 10% from the same month last year; domestic sales dropped 8%. Sales of German cars in the U.S. have fallen drastically, also.

What can drive the iShares MSCI Germany (EWG) to greener pastures? Time and the rest of the world will have to decide. It’s down 49.7% year-to-date. Daimler is 4.9%; Volkswagen is 6.5%.

Germany ETF

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.