gloom over eurozone as german growth outlook darkens
Last Updated : GMT 08:42:25
Arab Today, arab today
Arab Today, arab today

Gloom over eurozone as German growth outlook darkens

Arab Today, arab today

Arab Today, arab today Gloom over eurozone as German growth outlook darkens

Gloom over eurozone as German
Berlin - AFP

The outlook for the eurozone darkened Thursday as top think tanks slashed their forecasts for German growth -- traditionally the bloc's economic engine -- both this year and next.
And the institutes urged the German government to abandon its austerity mantra and boost public spending to kick-start growth, just as a number of countries led by France have long argued, and as new showdown on economic policy in the eurozone looms.
The four institutes -- Ifo in Munich, DIW in Berlin, RWI in Essen and IHW in Halle -- predicted in their widely-watched half-yearly report that the German economy would grow by just 1.3 percent in 2014 and 1.2 percent in 2015.
That is much lower than the 1.9 percent and 2.0 percent they had previously expected.
And they argued instead of always trying to balance its books, Berlin should ramp up investment in the public sector as a way of reigniting the flagging economy.
"Economic growth in Germany has cooled noticeably," said the institutes', whose reports are used by the government as a basis for its own economic forecasts.
Earlier this week, both the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) warned about a loss of momentum in the eurozone recovery as the German economic engine stalled.
"After gross domestic product contracted in the second quarter and likely stagnated in the third quarter, the economic engine is finding it difficult to get going," the report said.
"The German economy is stagnating. And there's no indication for the moment that that will change before the end of the year," DIW economist Ferdinand Fichtner told a news conference.
Domestic demand was weak, with the consumer climate deteriorating and companies continuing to scale back investment.
And foreign demand was also weak, with "only sluggish growth in the global economy and slowing momentum in the euro area," the institutes said.
Earlier Thursday, trade data for both France and Germany further darkened sentiment for the eurozone as a whole, as exports from its two biggest economies dropped sharply.
- ECB measures can't help -
A policy of easy money, as currently practised by the European Central Bank, was not the cure-all for Europe's problems, the institutes argued.
"Monetary policy is trying its best to stimulate the eurozone economy and interest rates are very low in Germany as a result.
"However, the latest raft of measures are unlikely to provide any additional impulses for the economy," the institutes warned, referring to the ECB's contested plans to buy bonds and other assets in order to inject cash into the economy.
The onus was therefore on governments. And Berlin should increase spending in the public sector, the experts believed.
"The government isn't making sufficient use of the margin for financial manoeuvre with regard to investment, such as in infrastructure," said DIW's Fichtner.
"On the spending side, public spending should be increased in those areas which can potentially boost growth," the institutes said.
Fichtner suggested that balancing a country's books "isn't necessarily an end in itself from an economic point of view."
In fact, it could cost more in the long run, in terms of low growth, than the immediate costs of a small deficit, he argued.
- Budget tensions -
The institutes' call for increased public spending will please Germany's eurozone partners, such as France, which are arguing for a relaxation of the single currency bloc's budget rules, despite fierce resistance from Berlin.
At an informal meeting of EU leaders in Milan earlier this week, French President Francois Hollande threw down the gauntlet to German Chancellor Angela Merkel by saying that instead of further austerity measures to trim France's budget deficit, the rules should be eased to reverse flagging growth across the eurozone.
At the four institutes' new conference, Roland Doehrn of RWI, acknowledged that the budget question was a "source of tension."
But Oliver Holtemoeller of IWH insisted: "It's not a measure of spending as much as possible," but kick-starting the moribund economy.
Berenberg Bank economist Christian Schulz said he expected the German economy to expand by a meagre 0.1 percent in both the third and fourth quarters "and we cannot even rule a mild technical recession."

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

gloom over eurozone as german growth outlook darkens gloom over eurozone as german growth outlook darkens

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

gloom over eurozone as german growth outlook darkens gloom over eurozone as german growth outlook darkens

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Prince's vision spurs new Cornwall village

GMT 03:12 2017 Saturday ,18 November

Prince's vision spurs new Cornwall village
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Israel ready to cooperate with Saudi

GMT 06:31 2017 Friday ,17 November

Israel ready to cooperate with Saudi
Arab Today, arab today Airbnb raided by Japan

GMT 01:55 2017 Saturday ,18 November

Airbnb raided by Japan
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Tesla unveils its all-electric semi truck

GMT 02:59 2017 Saturday ,18 November

Tesla unveils its all-electric semi truck
Arab Today, arab today Baidu speeds up AI progress

GMT 11:46 2017 Friday ,17 November

Baidu speeds up AI progress
Arab Today, arab today Ayten Amer happy for “The Flood” success

GMT 08:06 2017 Wednesday ,15 November

Ayten Amer happy for “The Flood” success
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 08:21 2017 Tuesday ,14 November

Nelly Karim focuses on humanitarian roles

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 06:13 2017 Friday ,17 November

Pope denounces healthcare inequality

GMT 05:18 2017 Thursday ,16 November

Boeing announces $27bn from flydubai

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday