What if Germany begins 2012 with a negative growth?

By Julia Pastor, in Madrid | Three news reports about the German economy stand out in all European media this week, none of them especially good. On one hand, the German statistical office (Destatis) has published the overall 2011 GDP for the country, which showed a slowdown to +3% compared to 3.7% in 2010, and a contraction about -0.25% in the 4Q. Also, the German inflation closed the year with a record figure in the last three years, standing at 2.3% against 1.1% and 0.45 of 2010 and 2009, respectively.

These figures has been revealed just one day after the Bundesbank sold 6- month Treasury bills by €3.9bn, which have been strongly demanded exceeding in 1.8 times the inicial offer, but also returned negative for the first time in history at an average yield of 0.0122%.

The Spanish El País also publishes a piece which highlights the lack of consensus between the German analysts about the country’s economy evolution in the near months. The daily’s correspondent in Berlin comments:

“Given the unprecedented current debt crisis, the different institutes of economic studies do not come to an agreement: for example, the German Institute for Economic Research (DIW), foresees a ‘soft’ recession in the first quarter of the year and a later improvement ‘in the case Europe manages to control the euro crisis’. Up to that momento, markets will go on being influenced by ‘irrationality and hysteria’.

“The Finance Minister Wolfgang Schäuble advises not to ‘lose ones’s temper […] But nobody doubts that, if Germany grows in 2012, it will do scarcely. The Bundesbank expects that the German GDP will increase around 0,6% during present year. They think that the situation will improve by 2013, for which experts predict a recover of 1,8.”

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

Be the first to comment on "What if Germany begins 2012 with a negative growth?"

Leave a comment