BLAMING Germany—or at least the austerity prescribed for the euro zone by Chancellor Angela Merkel—for Europe’s ills may be popular in France. But Germans are inclined, not without some pride, to see their economy as the strongest horse to pull the euro zone out of its misery. Hence the fear caused by a surprising update this month: real output shrank by a seasonally adjusted 0.2% in the second quarter from the first, and manufacturing by 1%.Part of the explanation was statistical. Thanks to a mild winter, there was more construction than usual in the first quarter. But geopolitical crises, especially in Ukraine, had a bigger impact. German exports to Russia have plummeted. Given the timing, the drop was due less to sanctions already imposed than to expectations of more to come. Russia accounts for only 3% of Germany’s total trade, so the losses were easily made up in higher exports elsewhere. More devastating is the rising uncertainty over Russia that is causing managers to delay investment. Germany’s Ifo business-climate index, a widely watched benchmark, fell in August.Aside from such new risks, however, the underlying German economy still…
