Despite a slew of disappointing data from Germany this week Axel Weber, UBS chairman and former Bundesbank president, told CNBC he was concerned that the economic issues surrounding the slowdown weren't being fully understood.
"If you as a medical doctor take the wrong diagnosis, you're very easily give the wrong medication," he said.
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German foreign trade data on Thursday morning showed its biggest fall for five and a half years. The figure for August slumped by 5.8 percent against expectations for a 4.0 percent fall. The country also missed forecasts earlier this week for industrial output numbers which slowed by 4 percent month-on-month in August. German factory orders, out on Monday, also showed a steep—and unexpected—decline. The data has been so bad that it helped spark a global selloff in equities that was only tempered by dovish minutes from the Federal Reserve on Wednesday evening.
Weber was asked whether the soft data would lead to German officials succumbing to proposals for the European Central Bank to embark on a full-scale quantitative easing (QE) program in the euro zone. Germany is traditionally the most resistant to QE with fears that it might stoke inflation and conflict with tough austerity plans in some of the struggling nations in the region.
Weber told, CNBC that he was more concerned that people didn't see the real reasons behind the German data. He blamed the slowdown on the sanctions imposed on Russian by Western nations due to the tensions on the Ukrainian border.
"There's a lot of geopolitical risk," he said.
"Germany has a 1.4 percent of German GDP (gross domestic product) as exports to Russia. We've already seen in the second quarter that those exports came down by roughly a third."
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Most of the weakness in the German industry can largely be explained by the direct impact of some of the trade barriers imposed on Russia, he said, adding that a move to a fully-fledged range of sanctions would mean that 1.4 percent of German GDP would disappear and look for a different export destination.
Hans-Werner Sinn, the president of the Ifo Institute - a Munich-based economic think tank - agreed. He told CNBC Thursday that 40 percent of German businesses have some sort of relationship with Russia.
The penalties imposed on Russia are "clearly the main reason" for a fall in business expectations in Germany, he said.
"Also Brazil and some other emerging countries are having some difficulties," he added. A fall in the euro would not help exporters until some time next year, according to Sinn, but he suggested that the weak data could also be due to the fact that northern Germany opted to change the timing of their summer vacations.
The country's Federal Statistics Office also noted on Thursday morning that late summer vacations had accentuated the fall in both exports and imports.
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