Germany to ‘escape recession’ in 2012

Germany will escape recession this year despite the ongoing eurozone debt crisis and return to solid growth in 2013, one of the country's top institutes said Wednesday.

Germany to 'escape recession' in 2012
Photo: DPA

After a possible short and shallow contraction of the economy at the beginning of this year, Germany will grow by 0.6 percent in 2012 and then by 2.2 percent in 2013, the German Institute for Economic Research (DIW) institute said in New Year forecasts.

But the institute’s head of economic research, Ferdinand Fichtner warned, “This will only happen if politicians come up with a convincing solution to the eurozone crisis in the next few months.”

Continued chaos in the 17-nation eurozone could lead to a “negative spiral of rising unemployment and falling demand” in Germany, Fichtner said.

The turmoil in the sovereign debt markets of several euro countries should lead to an overall shrinking of the eurozone’s economy in 2012, but it was also expected to recover the year after, to grow by one percent, the DIW said.

“If the debt crisis gets even worse and France, for example, becomes infected, then the recession could be significantly worse,” said Fichtner.

German Economy Minister Philipp Rösler also warned that growing risks to the global and eurozone economies could end up harming Europe’s powerhouse.

Speaking to business daily Handelsblatt, Rösler said the government’s next major economic report, due mid-January, would likely “confirm” the risks identified towards the end of last year.


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German watchdog steps up monitoring of popular N26 online bank

Germany's financial watchdog on Wednesday ordered online bank N26 to step up "internal controls and safeguards" to prevent money laundering and terrorist financing, and said it was appointing a special representative to monitor progress.

German watchdog steps up monitoring of popular N26 online bank
An N26 card. Photo: Wikimedia Commons

Bafin’s announcement marks an escalation of previous warnings to the popular Berlin start-up, which has come under fire in the past for not properly verifying the identities of new customers.

“Bafin ordered N26 Bank GmbH to rectify deficiencies both in IT monitoring and in customer due diligence,” the regulator said in a statement.

N26 “is required to ensure that it has the adequate personnel, technical and organisational resources to comply with its obligations under anti-money laundering law,” it said.

A “special commissioner” would oversee the company’s efforts, Bafin added. Founded in 2013 and known for its transparent debit cards, digital bank N26 is one of Germany’s most high-profile financial technology or “fintech” firms and now has seven million customers in 25 countries.

Its rapid growth has rested in part on fast-track identity procedures for new customers.

READ ALSO: What is the digital German bank N26 that’s about to hit a million users?

In 2019, German business weekly WirtschaftsWoche said it had managed to open accounts using forged IDs.

N26 on Wednesday pledged to “work closely” with Bafin and the special representative.

It said it had already significantly increased measures to prevent money laundering in recent years, “but we recognise that more must be done in this area”.

The coronavirus crisis had contributed to a spike in fraudulent online transactions worldwide, N26 added, “increasing the demands placed on banks in the fight against crime”.