July 28, 2021

Germany, the European engine, cuts its growth forecasts

Germany, the European engine, cuts its growth forecasts


As an export power, Germany suffers from the new global trade climate. The government of Berlin cut yesterday its forecast of growth for this year half a percentage point, up to 1.8%, confirming the braking of the euro economy, whose traditional engine fails to take the lead in the new digital economy nor escape the global cooling that the IMF has predicted. And perhaps the most serious thing is that the traditional instruments and references are no longer working.

German companies continue to invest in machinery and facilities and investments in the construction sector remain active due to low interest rates and high demand, as explained yesterday, during the presentation of these data the Minister of Economy, Peter Altmeier. "People in our country continue to benefit from the good economic situation," he said, noting that by 2019 an increase in the employed population is expected to reach 45.3 million people, with 400,000 more to be added to the 590,000 more than this year. Unemployment, in fact, continues to decline: from the 5.2% predicted for 2018 to 5% by 2019, and all this added should be a sign of growth. But it's not like that. The "ongoing commercial conflicts around the world," among which Altmeier mentioned the one that the United States and the European Union are waging since the beginning of the year, and the one that is currently worsening between that same country and China, are reformatting the map global economic

He also admitted the impact of the new system of homologation of consumption and emissions of WLTP vehicles and its effects on the automobile sector, dismembered by the diesel crisis. And although the minister indicated as an excuse technical modifications in statistics, which has lowered the base effect by 0.2%, he acknowledged that "the weakening of the World Trade Organization (WTO)" puts us in a very different scenario.

Berlin does not have a better panorama in 2019, Year of Brexit and ECB rate increases. In the minutes of the last meeting, the Governing Council noted its concern that "trade tensions generate a more general fall in confidence in the economy" and an increase in "the risks related to the threat of protectionism, the vulnerabilities in emerging markets and the volatility of the financial market ». "The party is over," said Klaus Wohlrabe, of the Ifo Institute, "it is not a recession, but a clear change of trend".


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