German industrial output fell in August at its fastest pace in a year suggesting Europe's largest economy may have lost momentum in the third quarter. As David Pollard reports, it follows a warning from the IMF about the impact of China's slowdown on global growth.
It makes worrying reading. As delegates gather for the IMF's annual meeting in Peru, they're still digesting a downgrade on global growth. Germany is adding its own gloomy take on that. A shock fall there in industrial output is the biggest drop in over a year. China is a factor. But Germany has worries at home too. Jeremy Cook of World First. SOUNDBITE (English) JEREMY COOK, CHIEF ECONOMIST, WORLD FIRST, SAYING: ''The big, big risk, obviously, is the hit to confidence, the hit to industrial confidence, as a result of the Volkswagen issues .... the general industrial investment that will slip in this part of the German economy is going to hurt and that's going to hurt everyone around Germany, be it the Czech Republic or Hungary or Poland as well.'' Globally, the IMF has cut its outlook for the second time this year. A growth rate above 3 per cent still appears healthy. But anything below is seen as close to setting off recession alarm bells at the IMF. The US and the UK are still star performers. Though the IMF warns that premature monetary tightening by the first of those is another risk. As is the drop in commodity prices hitting emerging markets. China's growth is expected to slow this year and next. SOUNDBITE (English) JEREMY COOK, CHIEF ECONOMIST, WORLD FIRST, SAYING: ''It's the major laggard that we have on the world economy at the moment. It's the main fear for emerging markets, it's the main reason I would think why the Federal Reserve has not normalised its policy, so if there's one thing that governs everything at the moment, it's that China slowdown.'' Latest reports suggest the Ifo and Germany's other leading economic forecasters are planning their own revisions this week. Growth for Europe's biggest economy expected to be marked down from 2.1 to 1.8 per cent for the year as a whole.