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18 October, 2019 00:00 00 AM
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Looming recession to weigh on German forecasts

AFP, Berlin

Berlin will publish yesterday updated growth forecasts for Germany that are likely to reveal a still weaker outlook than before, but it remains hesitant to stimulate its own and partner economies. In the economy ministry’s predictions for growth in the gross domestic product, presented around 2:00 pm (1200 GMT), observers are already bracing for a bleak picture.

The news weekly Der Spiegel reported that GDP expansion next year is forecast to reach just 1.1 per cent, compared with 1.5 per cent predicted earlier this year. Government economists are expected to stick to a projection of 0.5 per cent growth this year, the magazine added, a fraction of the 1.4 per cent achieved in 2018 or 2.2 per cent the year before.

Germany is already believed to be in a technical recession — defined as two successive quarters of negative growth. Economic output fell by 0.1 per cent in April-June, and July-September figures slated for release next month are expected by the Bundesbank (central bank) to show another contraction.

The first recession in nine years marks the end of a post-2008 golden decade for Europe’s largest economy, which has enjoyed steady growth buoyed by both exports and domestic demand. But the country’s massive trade surplus — a source of national pride for many media outlets — has turned into a weakness since President Donald Trump launched his US-China trade war. Other risks to international commerce, like Brexit uncertainty, have also weighed on Germany.

Increasing numbers of large firms are announcing layoffs or slashing workers’ hours, job creation is slowing and economic indicators point towards slowdown. With economic headwinds mounting, calls have grown at home and abroad for Germany to loosen the straps of its self-imposed fiscal straitjacket.

Economists, politicians and commentators are discussing whether it might be time to abandon Berlin’s longstanding “black zero” policy of no new debts, allowing government to spend and stimulate growth.

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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