Economists: Germany in a recession now
As European leaders struggle to stave off a looming recession this year, Germany – the continent’s biggest and healthiest economy – is probably already in one, according to economists surveyed by Die Welt newspaper.
Of the economists surveyed at 14 major financial institutions including Deutsche Bank, Allianz and Citigroup, only four said Germany was definitely not in a recession – generally defined as having two consecutive quarters of decline in gross domestic output.
Although the experts said they expected the German economy to remain weak over the first few months of 2012, most believed things would pick up during the year.
Three experts said they thought the economy would be stagnant in 2012, while one said it would contract and the others predicted slight growth of up to 1.4 percent.
The biggest risk factor for Germany is a predictable one: The state of the euro and the continent’s backbreaking sovereign debt crisis, they said.
Though Germany set a record for the volume of exports last year – experts said on Monday it would reach the €1 trillion mark once December data is tabulated – exporting companies were hit by weakening demand toward the end of 2011, particularly from other European countries. There was a decrease in new industrial orders of 4.8 percent in November, Die Welt reported.
The economists questioned said another looming danger would be a European credit crunch, in which banks would curb their lending making it difficult for companies to invest more in their businesses.
“A credit crunch in some member countries of the eurozone, which are particularly plagued by the debt crisis, is almost inevitable,” said Stefan Schilbe an analyst at HSBC.
Still, most expect the German economy to be largely spared credit problems, which are more likely to financially weak countries like Greece or Italy.
Full gross domestic product data for 2011 is expected to be released on Wednesday. The experts all believed Germany would end up with a 2011 GDP growth of about three percent despite year-end contractions, Die Welt reported.