Europe's standoff with Russia has affected the region's largest economy after economic confidence in Germany nosedived unexpectedly, fuelling fears the eurozone's weak recovery will be snuffed out.

Hostility between the west and Vladimir Putin over Russia's treatment of Ukraine is already hurting the German economy, according to a closely watched survey of investor mood.

The ZEW indicator of economic sentiment plunged more sharply than expected to a 20-month low of 8.6 points from 27.1 points in July. Economists polled by Reuters had forecast a far smaller drop, to 18.2 points.

Economists said it was a worrying sign of faltering confidence in Germany, which has been instrumental in lifting the wider eurozone out of the worst of the crisis and was the UK's second largest trade partner in terms of good exports last year. The imposition of tit-for-tat sanctions between Russia and the EU, with Brussels banning exports such as oil and gas equipment to Russia and the Kremlin retaliating with an embargo on European food imports, has hit confidence.

"Fear is back," said Carsten Brzeski, an economist at ING. "The German ZEW just sent more signs of caution, showing that at least financial market participants are increasingly becoming pessimistic."

The extent of Germany's woes will be laid bare on Thursday when the first official estimate of second-quarter GDP is expected to show zero growth, following a 0.8% rise in the first quarter.

Brzeski said the danger for Germany was that a weak second quarter could turn into something more serious. "Looking ahead, today's ZEW sends a worrying signal that the growth performance in the second quarter could suddenly morph from a one-off into an undesired trend. Up to now, the fallout of the Ukraine crisis has been limited to a general return of uncertainty and a sharp drop in German exports to Russia. Obviously, a further escalation of the crisis could start to really hurt the economy."

The ZEW index, which measures investors' expectations for the economy in six months' time, has fallen for eight consecutive months amid weak growth in the eurozone overall – the UK's biggest trading partner. Growth in the eurozone is expected to have slowed to 0.1% between April and June from 0.2% in the first three months of the year. The fear is that heightened tensions will be enough to halt the fragile recovery.

Germany stands to be among the hardest hit by the west's stance on Russia because it is Russia's biggest trading partner within the EU.

The authors of the ZEW report said the decline in economic sentiment was the result of the geopolitical tensions that have begun to weigh on Germany's growth.

"In particular, current figures on industrial production and incoming orders suggest markedly reduced investment activities on the part of German firms against the backdrop of uncertain sales prospects. Since the economy in the eurozone is not gaining momentum either, the signs are that economic growth in Germany will be weaker in 2014 than expected."

The European Central Bank (ECB) made clear last week that it is ready to unleash quantitative easing in the eurozone should the outlook for the currency bloc worsen. Inflation in the 18-member region slipped to 0.4% in July from 0.5% in June, reigniting fears that the eurozone is moving dangerously close to deflation.

Meanwhile, new data from Portugal showed weak demand is damaging the eurozone's periphery. Figures from the Portuguese statistics office on Tuesday showed deflation accelerated in July, with prices falling by 0.7% over the year. It was worse than expected after economists predicted inflation would remain unchanged at June's rate of -0.2%.

The fear is that falling prices will trigger a deflationary spiral, where consumers and businesses put off purchases because they are expecting prices to fall further.

Mario Draghi, the ECB's president, said last week the region's recovery remained "weak, fragile and uneven", and warned sanctions and counter-sanctions between the west and Russia were among the biggest risks facing the eurozone economy.

"Geopolitical risks are heightened. And some of them, like the situation in Ukraine and Russia, will have a greater impact on the euro area than they … have on other parts of the world," Draghi said.

He added however that measures announced in June were starting to be successful. At that point the ECB cut the main interest rate to 0.15%, imposed a negative rate of -0.1% on bank deposits, and announced a €400bn (£317bn) package of cheap finance to encourage bank lending.
http://www.theguardian.com/world/2014/aug/12/germany-economy-eurozone-recovery-russia-sanctions

Omexonomy: How true is these coc.k and bull story from the guardian. Though sirshymexx somotimes post *** stories.
Is russia their only trading partners ?

SirShymex: ^^^^Principle for an inconsequential country and the people have to suffer because of the adventurism of another country on the other part of the planet, across the Atlantic, no?

What's in Ukraine for Europe, apart from scroungers, an economy that's basket-case, and fracking that America has already appointed Joe Biden's son as the head of Ukrainian oil company?

Rikidony: Theguardian is the Nigerian version of Saharareporters. i dont trust them

Rikidony: Theguardian is the Nigerian version of Saharareporters. i dont trust them

SirShymex: Europe's largest economy is about to nose-dive, while the smaller ones are already in the toilet. With the UK and France still standing(I doubt that will last for long due to how Europe is interconnected). scary.

This is what happens when you let a selfish adventurist keep making you follow it everywhere like a dog. The EU can stand alone and make decisions for itself. The sanctions are just getting started, yet everyone is feeling the heat. What will happen when the full economic war starts? Lose lose for everyone involved smh..

Another recession is on the horizon.

SirShymex:

So, the best Newspaper in the UK and the same Newspaper that has won the Pulitzer prize on several occasions, with arguably the most intellectual posters the UK has to offer is rubbish, no?

When I said most Nigerians are stark illiterates, some would say I'm abusive...but take a look at this heffa who can barely spell, yet he thinks he knows a lot. Can you even read?

BekeeBuAgbara: Germany would know the real meaning of sanction if Russian bans German made cars. Since Russia banned importation of apple from Poland, the Polish government had been urging its citizens to increase eating apple.
The EU never expected this from Putin, next time they will think twice before following US like slaves.

emmatok: LOL, as if the Russians are also not feeling the heat.

SirShymex:

The EU is already begging Latin America not to replace it, in food export to Russia. But Latin America is not having it since they're non-allied. Poland has also asked America to buy the apples meant for export to Russia. And that's just food sanctions alone, now imagine if they cut the gas or ban German companies in Russia - it's over for the EU.

America has nothing to worry since it's overly in debt and all they have to keep printing trillions of dollars they can't account for, till other countries dump the dollar and start trading in another currency.

Ukraine Crisis Takes Toll on Germany’s Economy, Powerhouse of the Eurozone

The dispute between the West and Russia over Ukraine has led to tit-for-tat sanctions from the United States and Europe on the one hand and Russia on the other. While Russia’s share of the global economy is small, about 3 percent, it is one of Germany’s 10 largest trading partners, according to the Association of German Chambers of Commerce and Industry, and nearly 300,000 German jobs depend on exports to Russia.

Italy has fallen back into recession, and France, the second-largest eurozone member after Germany, appears moribund.

http://www.nytimes.com/2014/08/13/business/international/ukraine-crisis-takes-toll-on-germanys-economy-powerhouse-of-the-eurozone.html?_r=0

SirShymex:

So, the best Newspaper in the UK and the same Newspaper that has won the Pulitzer prize on several occasions, with arguably the most intellectual posters the UK has to offer is rubbish, no?

When I said most Nigerians are stark illiterates, some would say I'm abusive...but take a look at this heffa who can barely spell, yet he thinks he knows a lot. Can you even read?

BekeeBuAgbara:

Poland asks US to import apples banned by Russia

Warsaw (AFP) - Poland has asked the United States to open its market quickly to Polish apples banned by Russia in a sanctions war over the crisis in Ukraine.

Poland's ambassador to Washington, Ryszard Schnepf, said he had met Michael Scuse, a senior official in the US Department of Agriculture, about the steps needed to open up the US market, the Polish press agency PAP reported.

"We are interested in a quick decision because the situation is extraordinary," Schnepf was quoted as saying.

"He told us to begin the procedure. We have a new meeting planned for August 18 with the heads of the agency that allows for the entry of agriculture products to the United States," he said.

"There is a greater understanding on account of the fact that the United States has also been hit by Russian sanctions," he added.

The United States severely restricts imports of fresh fruit and vegetables from the European Union, including EU member Poland, PAP said.

However, there are exceptions and Poland exports peppers and broccoli to the US market while Italy exports apples and pears, PAP said.

Poland is by far the leading exporter of apples in Europe, ahead of Italy and France.

Moscow announced on Thursday it was introducing an embargo on most food imports from Western countries that have imposed punishing sanctions against Russia over its annexation of Crimea and alleged support for rebels in eastern Ukraine.

Imports of beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products from the European Union, United States, Australia, Canada and Norway have been immediately banned.

http://news.yahoo.com/poland-asks-us-import-apples-banned-russia-135221139.html

Omexonomy: How true is these coc.k and bull story from the guardian. Though sirshymexx somotimes post *** stories.
Is russia their only trading partners ?

SirShymex:

So, the best Newspaper in the UK and the same Newspaper that has won the Pulitzer prize on several occasions, with arguably the most intellectual posters the UK has to offer is rubbish, no?

When I said most Nigerians are stark illiterates, some would say I'm abusive...but take a look at this heffa who can barely spell, yet he thinks he knows a lot. Can you even read?

castrogee: At OP,

Honestly, what I'm yet to understand is the blind and sheepish EU's obedience to the US... Can't the EU for once be their own voice, from the beginning of this crises it was clear that EU was just a pun in the hand of the US and then I was confident that EU will find its own voice but I was left very disappointed.

Putin warned the EU that sanctions will boomerang on them and ironically Americas second quarter economy grew by almost four percent while those of the EU are nosediving.

The truth of the matter is that this game will be won by Putin, because EU can not afford another recession at this time and fighting between The rebel and Ukraine government will never end against Putin instead Putin will invade the country and just watch as the yanks will quietly crawl back into their hole... After all he did it to the Georgians!

doctokwus: What's d point of this thread?To glorify one nation annexing another?Putin's ambition if not checked wud not stop @ukraine.The man's aim is to annex all former soviet territories.If anyone is under any delusion dat d EU wud suffer d most,den its a pity.
D russians are going dis far to apply retaliatory sanctions bc its faltering economy wud b left in ruins if any extended sanctions on it are applied.
D EU,though wud take a hit,but once russia gets cut off frm dat mkt for its oil and gas,den we wud see if it wud not back off frm its dangerous path.