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ECONOMY

Rösler plans special investment for Greece

German Economy Minister Philipp Rösler is reportedly working on a 16-point plan to encourage German companies to invest in Greece, including the idea of setting up special economic zones.

Rösler plans special investment for Greece
Photo: DPA

Just hours after the eurozone countries agreed a €109 billion rescue package for the Greek economy, business daily Handelsblatt on Friday reported Rösler was preparting to launch a type of Marshall Plan for the trouble country titled: “Investment and Growth Offensive for Greece.”

The paper, which said it had seen the plan, reported that its stated aim was to produce inducement for firms in order get them to contribute to increasing Greek economic growth in the long term.

The first step would be to organise a investment conference with the top business organizations in Germany. Rösler said he had already secured the ‘advisory support’ of the Greek government in connection with the privatisation of state assets, the paper reported.

German industry on Thursday displayed its enthusiasm to work in Greece, with the Federation of German Industry (BDI) saying the rescue package agreed by the eurozone countries was only one element of what was needed.

“We also urgently need an investment programme, a business plan, a plan for the reconfiguring of the Greek economy,” said BDI manager Markus Kerber.

The country should not only be able to bear its debts, but with the help of a different economic model, should also be able to achieve earnings in order to reduce its debts in the long term, he said.

Rösler said the organisation ‘Germany Trade and Invest’ was going to help Greece attract investors. Particularly interesting sectors include renewable energy, power station construction, energy efficiency, as well as tourism, telecommunications and transport.

Rösler’s plan also includes an EU-wide investor conference, to be set up with the German government, one aim of which will be to examine the idea of establishing model regions which would have special regimes. They would have their own specific laws covering labour, tax and planning, and have a single contact for investors.

The Local/hc

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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