14/01/2016 World Business Report

Can Germany's economy shrug off the cold winds from China?

We look ahead to the latest growth figures

Welcome to World Business Report, I'm Sally Bundock.

We start on Wall Street where the turmoil

After a brief rally this week the selling has returned

with a vengeance, with US shares falling sharply

Could things be about to below $30 a barrel.

Some analysts certainly think so, let's take a look a the numbers.

The Dow Jones losing more than 364 points or 2.2% and the S 500

Here's the worrying bit for many market watchers.

The S is now down 10.4% since its recent high in November.

A fall of more than 10% is known as a correction.

It can be a big blow to confidence in the markets,

and often a signal of bigger falls to come.

The Nasdaq also entered correction territory earlier this week

The next stage is this, a bear market.

That's where stocks fall 20% from their peak and negative

Well, as of Wednesday shares of smaller US companies have now

We'll be hearing from our correspondent in New York

Earlier Thursday it looked like the market would regain some of its

losses from its brutal first week of the New Year, but then we saw a

broad sell-off that cause they plunge, the Dow closed down 2.2% and

the Scottish National Party 500 sub 2.5%. That brought it down 10% from

its November peak and that is known as a correction or adjustment for an

overvaluation. The last time we saw a plunge that big was in August and

that correction, like this one, was sparked by financial turmoil in

China. But it continues to show the nervousness over tumbling oil prices

and concern over global growth. Investors have been shifting their

money to assets seen as safe, like US government bonds. If we look

particularly at oil, it's been down roughly 18% so far this year. It

also had a brief rally on Thursday before prices fell again. We've

heard this could be an issue throughout 2016 really weighing on

the markets. One U we heard was from a leading analyst from society they

general, Albert Edwards, he said the world could be heading for a

financial crisis as severe as 2008 -- society general. That is the more

dramatic side of the views out there but it shows the uncertainty.

Pessimism is definitely the the word that is relevant today.

Let's check how things are looking in Asia now,

Sharanjit Leyl is in our Singapore bureau

What is happening at the moment, it is definitely following the tone set

on Wall Street? That's right, Sally. The King at the markets and seeing

how they are trading, they are all tumbling lower after that sell-off

on Wall Street -- looking at. Lots of investors nervous about the stock

market. There in mind the explosions and gunfire heard in Jakarta, that

is rattling a lot of investors in the region -- bearing mind. The

Indonesian currency was sold off after that. Then you have the recent

rocky ride in Chinese stocks, putting of investors from investing

in stocks. Yesterday we were talking about better than expected trade

numbers from China, but that has failed to dispel a lot of pessimism

among investors here that Asia's largest economy is heading for a

hard landing. Today we are seeing the Nikkei falling as much as 4%.

Earlier it did breach the psychologically important 17,000

mark, falling just below that, and we saw weak economic data from

Japan, that has affected sentiment after core machinery orders, and

important gauge of the economy, they are unexpectedly falling, down 14.4%

in November from the previous month. You have that drop in oil prices as

well, that is adding to a lot of the pessimism. Bearing mind, we've been

talking about the rocky ride in the Chinese stocks, but the Shanghai

Composite index not down as much as people feared, but it is certainly

negative along with South Korean and Australian stocks. Thank you for

keeping us up to date, Sharanjit. Financial markets have started the

year so poorly, a lot of pessimism and negativity. So how does this

translate to economic growth of countries? We are going to focus on

Germany. In a few hours time it releases

growth figures for 2015, the economy is expected to have

grown 1.6% over the year despite the sharp slowdown in one

of its major export markets, China. Two thirds of the growth is expected

to have come from consumer People out in the streets of Germany

in the shops and online. Claus Vistesen is Chief

Eurozone Economist at Pantheon Macroeconomics,

he joins us from our studios in Newcastle in the

North East of England Thanks for being on the show. What

are you expecting from Germany in terms of growth for last year? I'm

actually expecting slightly less than what the market expects mainly

because the fourth quarter, where the statistical office will have to

make some assumptions on what happened, because we don't have the

full dataset yet, those assumptions will be slightly worse than the

market expects. So I think, you said 1.6%, I think perhaps 1.5% or 1.4%,

which will go down as a disappointment. But the key story

will be the German consumer is very strong. We have seen that through

the year. Whereas manufacturing, as a result of headwinds from China, is

probably going to be weak. Talk us through some of the challenges

facing the German economy at the moment. Of course there's lots of

political challenges in terms of events taking place in Germany and

the migrant crisis. They took in 1 million migrants. What is the year

ahead looking like for this economy? I think the year ahead... As we are

standing here it looks very much like the one we have just had. The

consumer will have to do the heavy lifting again, at least at the start

of the year, because we are still seeing poor data out other emerging

markets in China. Then you have manufacturing, which has been doing

all right in Germany, but not that well. And exports, which again have

been doing all right, but not as as you would expect given a more

broad-based cyclical recovery and easy monetary. What we should expect

next year, or this year, as it were, from Germany is more of the same.

And the key question is whether the German consumer can continue to pull

its weight, as we saw last year, because that will really determine

whether Germany has a really good year, as I think it had last year,

or whether it will have a mediocre or even slightly poor year. Thank

you for your time early this morning. Thank you. Some other

business stories now. UK luxury brand Burberry gives

a quarterly trading update later, investors will be looking to see how

the company fared over the crucial Shares have slumped 43%

since their peak last February amid the slowdown in China

where Burberry makes more than a third of its revenues,

piling the pressure on chief Shares of action camera maker GoPro

have plunged after it gave a disappointing revenue forecast

for the fourth quarter and said GoPro shares fell 28% to $10.50,

less than half the price It's being hit by competition

from the likes of China's Xiaomi which are offering

cheaper rival cameras is bucking the trend,

though, its shares have risen after the firm

said it would be more profitable and return more money

to shareholders. Shares in the biggest US carmaker

closed 0.6% up after it raised its 2016 earnings forecast

by 25 cents a share. GM also plans to raise its stock

buyback programme by 80% to $9bn I have to say, US car-makers are

having a pretty good time. A record year in terms of sales last year. We

will talk about that in more detail when we look at today's papers

because a low oil price is playing its part in boosting the sales of

cars in the US. You can see how torrid things are in the markets in

response to what happened on Wall Street. I will see you soon.

Energy prices have dropped dramatically in the past year

and are set to stay low for the next two years,