German Economic Success ‘On Shaky Ground’
Posted by hkarner - 13. Januar 2012
Germany’s healthy domestic consumption will carry the nation through a downturn, experts predict.
Strong growth was measured for Germany’s economy in 2011, but slight contraction in the final quarter of the year has experts warning that recession could lie ahead. Troubled by the ongoing euro crisis, German editorialists on Thursday urge lawmakers to keep a deeper downturn at bay.
Though new statistics released on Wednesday showed strong economic growth in Germany for 2011, a slight contraction at the end of the year has prompted fears that Europe’s largest economy could experience a recession this year. Averaged throughout the year, growth of gross domestic product (GDP) was a “very robust” 3 percent. But the Federal Statistical Office’s preliminary estimate for the final quarter registered a foreboding 0.25 percent contraction. Economists have warned that the shrinkage was likely to continue into the first quarter of 2012, but many are still optimistic that Germany will recover in the second half of the year.
President of the Federal Statistical Office Roderich Egeler said that much of the growth in 2011 had been driven by domestic investment and private consumption, which rose by 1.5 percent, the highest jump in five years. Indeed, domestic consumption will continue to sustain the German economy for the rest of the year, Kai Carstensen of the Munich-based Ifo Institute told tabloid Bild on Thursday. “It will protect us from bigger problems,” he said.
Despite the expected downturn, many experts still forecast positive growth for the coming year. The Cologne Institute for Economic Research (IW) forecast a GDP increase of 0.6 percent, while Allianz predicts it will rise by 1 percent.
The German Economy Ministry was also optimistic, saying on Wednesday that thanks to the thriving domestic economy, a “marked weak phase is currently not likely.”
Hard Times Ahead for Europe
Other recent economic indicators suggest that 2012 will be rough for Europe as a whole, which will also prove challenging for Germany. On Thursday the Ifo Institute predicted that a short recession would hit the euro zone. GDP for the 17 member states shrank by an estimated 0.3 percent in the fourth quarter of 2011, and will likely contract again by 0.2 percent in the first quarter of 2012, it said.
The downturn is likely to cause problems for Germany’s strong export industry, with some 40 percent of exports going to other EU countries. Simon Junker, an expert with the German Institute for Economic Research (DIW), told news agency AP on Wednesday that thanks to the euro-zone crisis, both imports and exports were likely to slow down.
“Germany’s strongly export-driven economy will not be able to elude the slowdown of the global economy,” Junker said. “Especially German exports will suffer from the euro-zone crisis.” But if Europe’s leaders “manage to quickly and credibly contain the crisis,” there is no reason not to be optimistic for the future, he added.
On Thursday German commentators seemed to revel in their country’s overall economic success for 2011, but some warned that maintaining it would be difficult.