‘Made in Germany’ goods help dodge recession

Germany has avoided recession despite the resurgent eurozone debt crisis, official data showed on Tuesday, confirming the resilience of Europe's top economy to the surrounding turmoil.

'Made in Germany' goods help dodge recession
Photo: DPA

The country has shown remarkable resistance to the eurozone crisis despite some of its closest neighbours and trading partners suffering crippling financial woes. Both exports and imports are at a record high as demand outside Europe for goods ‘made in Germany’ continues to grow strongly.

The German economy grew by 0.5 percent in the first quarter of the year, federal statistics office Destatis confirmed, after contracting at the end of 2011, dodging a recession defined as two consecutive quarters of negative growth.

These figures were much better than the market had expected. Analysts surveyed by Dow Jones Newswires had pencilled in growth of 0.1 percent but were instead faced with growth of 1.7 percent, which the statisticians noted was driven by trade and domestic demand.

Meanwhile, unemployment is near its lowest level since reunification in 1990, in turn boosting domestic consumption and reducing Germany’s reliance on trade.

Germany suffered more than most from the international economic and financial crisis that worsened with the collapse of US investment bank Lehman Brothers – contracting nearly five percent in 2009 – but has since rebounded strongly.

Berlin is lagging slightly behind other big cities, though, and is forecast an increase of 0.7 percent for this year which is nonetheless still respectable compared with the eurozone as a whole.

Next year should see the growth rate more than double to 1.6 percent, according to economy ministry forecasts. And forward-looking indicators suggest Germany’s future growth path will be firm, with the closely watched Ifo Business Climate Index rising for the past six consecutive months.


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Worst of crisis now behind us, says Germany’s chief banker

Germany has turned the corner on the worst of an economic crisis sparked by the coronavirus pandemic and is now on the path to recovery, the central bank chief of Europe's biggest economy said Sunday.

Worst of crisis now behind us, says Germany's chief banker
Jens Weidmann. Photo: DPA

“We experienced in the last months the deepest economic slump in Germany's (post-war) history,” Jens Weidmann told Sunday's edition of the daily Frankfurter Allgemeine Zeitung.

“The good news is: the trough should be behind us by now, and things are looking up again. But the deep slump is being followed only by a comparatively gradual recovery.”

Weidmann, who has never minced his words against expansionary policies ramped through in the past by the European Central Bank, on Sunday also voiced support for the unprecedented economic rescue and stimulus packages unleashed by Berlin to shield German companies and jobs.

Chancellor Angela Merkel's government had stunned observers in March when it unveiled a rescue package worth 1.1 trillion euros, smashing through a long-held no new debt dogma to fund the measures.

Earlier this month, it said it would plough another 130 billion euros into various schemes, including a cut in VAT, to stimulate the economy.


Reacting to comments that Germany, once known as a “frugal” nation, was now dramatically loosening its purse strings, Weidmann said: “The image of the Swabish housewife is often wrongly portrayed.

“She is not saving for the sake of saving, but so that there is money that can be spent sensibly and in case there are difficult times. And that is precisely the case here.”

Like nations across Europe, Germany shut schools, shops and sent workers home from mid-March to halt transmission of the coronavirus.

The impact of the health crisis has pushed the economy into a deep recession believed to be the worst since World War II.

After the rate of new infections dropped sharply, Europe's biggest economy began easing restrictions in early May although social distancing rules are still in place and huge events banned.

Nevertheless, the improved health situation and the huge government support have helped lift sentiment, with a closely-watched survey showing confidence among investors surging to its highest level since before the financial crisis.