With the coronavirus pandemic unleashing a wave of job losses, bankruptcies and factory closures across the world, Germany’s GDP is due to shrink 6.3% in 2020, the government announced on Wednesday.

“We will experience the worst recession in the history of the Federal Republic” which was founded in 1949, Economy Minister Peter Altmaier said.

The economic blow would surpass the one left by the global crisis of 2009, which saw Germany’s economy shrink by over 5%.

Short-hours scheme for German workers

Altmaier said the nation’s economy is set to hit its lowest point before the end of June and then start growing again with 5.2% growth projected in 2021. He also warned that the government cannot restart the economy with a single stroke and risk the success achieved in combating the pandemic.

“Only if we lift economic and social restrictions step-by-step, and with a sense of proportion, can we start with the slow recovery in the second half of the year,” Altmaier said.

Read more: Coronavirus to cause ‘structural’ economic change

Germany’s export-oriented economy is also set to shed hundreds of thousands of jobs before the end of the year, putting the jobless rate at about 5.8% or around 2.62 million compared to its previous average of 2.27 million. Berlin has pushed multiple measures to mitigate the fallout.

According to Altmaier, around 3 million workers have already been placed on a short-time work scheme that sees employees reduced hours to avoid layoffs, and the government boosting the workers’ salaries.

‘Those are not really forecasts’

Commenting on Altmaier’s statement on Wednesday, however, the head of the German Institute of Economic Research (DIW) dismissed them as “wishful thinking.”

“Those are not really forecasts, those are scenarios… scenarios assuming that there is no second wave of infections, assuming that there is no new lockdown in the future,” Marcel Fratzscher told DW. “That’s wishful thinking — that the economy will recover next year. Clearly the answer to how will the economy get out of recession depends very much on the pandemic itself.”

At the same time, Fratzscher praised the government’s approach to helping mitigate the impact, saying that the Cabinet “has already done a lot in this first stage of this lockdown.”

“Hardly any government in the world has spent more money on stabilizing the economy, providing support to companies, direct financial transfers, huge guarantees for bank loans, particularly to small-to-medium-sized enterprises.”

Several large companies, including Adidas, Condor airline, and TUI travel company have already taken out massive government-backed loans. The country’s flagship carrier Lufthansa is still negotiation its bailout.

Source: https://www.dw.com/en/germany-faces-huge-economic-slump-due-to-coronavirus-pandemic/a-53286176

The post Germany faces huge economic slump due to coronavirus pandemic first appeared on Garner Ted Armstrong Evangelistic Association.

Western Europe hasn’t been immune to the global economic slowdown currently underway. Germany, with its export-oriented economy, is one of the countries that has been most affected.

Germany’s Federal Statistics Office announced Wednesday that the country’s gross domestic product (GDP) had contracted by 0.1% quarter-on-quarter in the April-to-June period, raising fears that the country may be headed for a recession. Economists define a recession as two consecutive quarterly contractions.

ING Chief Economist Carsten Brzeski said that the Q2 drop in output came as no surprise. “The point is that the German economy has more or less been in a state of stagnation since the summer of 2018,” he told DW after the latest data was released.

“This in itself does not mean that there’s reason to panic, but it surely means that a golden decade has come to an end in the country. The crucial question now is whether the German government will leave everything in the hands of Donald Trump and his trade policy or step into action itself and offer some fiscal stimulus.”

Industry leaders worried

His concern is shared by a number of German industry leaders, including representatives of the Federation of German Industry (BDI).

“The government’s balanced-budget policy should now be called into question in this economically fragile situation,” BDI Director General Joachim Lang told the German business daily Handelsblatt.

Experts put the quarterly drop in growth down to a slump in exports, with the nation’s manufacturing sector taking a severe blow over uncertainties related to the outcome of the protracted US-China trade conflict and the expected impact of a hard Brexit.

Exporters are certain that the German economy would face additional problems if a no-deal Brexit from the European Union by the UK actually materialized on October 31.

Domestic consumption affected?

What analysts view as particularly worrying is that a long-term pillar of the national economy, domestic consumption, may now also start to crumble. So far, though, demand remains fairly robust amid record-high employment, pay hikes in many sectors of the economy and low borrowing costs, meaning that people have more money in their pockets to spend.

Brzeski called for a level-headed approach to get out of the current slump. He noted that the second-quarter drop was anything but pronounced and wasn’t really reminiscent of what the German economy experienced about a decade ago.

“It’s not dramatic yet compared with the situation [during the global financial crisis in 2008/09. But the German economy is clearly running out of steam and needs a fresh impulse to take off again.”

Although the German economy may be teetering on the edge of recession, the government currently shows little resolve to act. Chancellor Angela Merkel on Tuesday brushed aside domestic and international calls for more fiscal stimulus, insisting there was “no need right now” for such a move.

Economy Minister Peter Altmaier acknowledged, though, that the most recent growth figures were “a warning signal” and showed that simmering trade conflicts had taken their toll.

He told the Bild newspaper on Wednesday that in order to avoid a recession, more investments in future-oriented technologies and digitization had to be made. He also mentioned the possibility of lowering corporate tax in order to support companies.

Source: https://www.dw.com/en/is-germany-edging-toward-recession/a-50019087

The post Is Germany edging toward recession? first appeared on Garner Ted Armstrong Evangelistic Association.

For many observers in Brussels, the twilight of Angela Merkel’s chancellorship in Berlin, which has now begun with her decision not to run again for CDU leader, comes as no surprise. After the failed EU refugee summit, political news portal Politico wrote off Angela Merkel as early as this summer. The chancellor’s assertiveness had suffered badly because of the internal quarrels in her grand coalition of CDU, CSU and SPD. “How Merkel divides the EU,” Politico wrote back then.

That was even before the state elections in Bavaria and Hesse and their severe losses for the grand coalition. But even then, it was clear that Merkel’s 2015 refugee policy course had facilitated the rise of populists in many EU countries. She was unable to enforce the solidarity she demanded on migration policies, nor a binding distribution of refugees. Only recently has she advocated closing off the EU’s external borders while setting up asylum centers in North Africa.

Read more: Opinion: Finally Angela Merkel shows leadership

Some ‘will be pleased’

Long before Italy’s current populist government was at odds with the chancellor, there were protests against her EU policies

Many in Poland, Hungary and Italy will hardly shed a tear for Merkel once she gives up the chancellorship. Many politicians in states bogged down by financial crises consider Merkel’s role in overcoming the financial and euro crisis in Greece, Cyprus, Portugal, Spain, Ireland and now Italy to be wrong, calling it too rigid, too austerity-oriented.

“Of course, Europe without Angela Merkel is possible,” says Janis Emmanouilidis, head of the European Policy Center think tank. “If you have a leading role like Germany and its chancellor do, then of course there will be countries and governments who are less satisfied with what Germany does,” he told DW. As such, he explained, there will be people in Eastern and Southern Europe who will be pleased when the chancellor is gone.

Merkel underestimated the refugee issue, Matteo Salvini, Italy’s radical right-wing interior minister, told DW in an interview in September. With an eye on Sunday’s election defeat in Hesse, Salvini said the result was a “blow with a hammer” for Merkel.

Embittered after austerity gripped the country, Greek protesters didn’t pull punches on their feelings toward Merkel

Merkel’s stability ‘a great asset’

Most EU states value her, according to Emmanouilidis — not least because she is the longest-serving head of government in the bloc, and simply has the most experience in Europe. People appreciated stability in Berlin, he argues. “In times of uncertainty, stability is a great asset.”

Many politicians at the EU’s headquarters in Brussels will have to get used to the fact that “Mutti” (mommy), as Merkel is fondly called by many in her party and the coalition government, might be leaving in the foreseeable future, says Emmanouilidis. She’s been in power for 13 years, so it is difficult to imagine politics without her, but her succession will be arranged, he adds. “There will be the first day after Merkel, a time after Merkel.”

Policy expert Emmanouilidis: It’s hard to imagine Europe without Merkel, but an orderly transition will be arranged

Decisions shelved

For months now, decisions on migration, Brexit or reform of the eurozone at the EU level have been postponed — due partly to the hesitant German chancellor who was too busy with the coalition at home to make time for the EU’s urgent crises. By announcing that she will give up the party chair and not run again for chancellor in 2021, some observers see her as a lame duck.

Longtime German finance minister and current Bundestag President Wolfgang Schäuble, however, disputed that characterization in a DW interview, saying that “her position is constitutionally strong” and that she’s likely to stay put as chancellor for years to come.

Germany, the largest and financially strongest member state, will of course continue to shape the EU regardless. EU diplomats do not expect progress on negotiations on the EU’s common budget before the European elections in May 2019. Günther Oettinger, whom Merkel sent to Brussels as EU commissioner, is responsible for the budget.

It also remains unclear what Merkel’s retreat in installments means for Manfred Weber, a member of the CSU who hopes to be nominated as the top candidate of the European People’s Party next week, with an eye on the post of president of the EU Commission. Germany’s head of government actually has a deciding voice in the matter.

Macron and his ‘good friend’: With her departure on the horizon, the French president may seize the chance to stake out a position as ‘the new Merkel’

Macron needs a new partner

French President Emmanuel Macron is unlikely to be particularly pleased by Merkel’s possible departure from the European stage. With the help of his “good friend Angela” he planned to advance his reform agenda for the monetary union. There is bound to be a period of uncertainty, says EU expert Emmanouilidis — not what Macron was hoping for.

On the other hand, he adds, the chancellor and the government have not responded to Macron’s proposals anyway. “The question is how this will develop after Merkel’s departure,” says the think tank researcher. It could also be an opportunity for Emmanuel Macron if Merkel leaves the driver’s seat.

The chancellor today also put an end to any speculation in Brussels that she might be aiming for a position in the European Union’s top management. Observers argued she could move to Brussels next year, either as president of the EU Commission or as president of the European Council. Both posts are up for grabs again in about a year.

Annegret Kramp-Karrenbauer, CDU

Kramp-Karrenbauer, also known as AKK, was Merkel’s choice to become general secretary of the CDU in 2018. She is reputedly Merkel’s pick as a successor as party leader. AKK headed a CDU-SPD coalition as state premier in the small southwestern state of Saarland before becoming the CDU’s general secretary. She is considered a moderate who would continue Merkel’s centrist policies.

Jens Spahn, CDU

The 38-year-old is the youngest and most overtly determined Merkel usurper. He entered the Bundestag in 2002 and became Germany’s health minister in 2018. Spahn, who is openly gay, is popular in the CDU’s conservative wing. He opposes limited dual citizenship for young foreigners, criticized attempts to loosen laws on advertising abortions and called for banning the Burqa in public.

Friedrich Merz, CDU

The former leader of the CDU/CSU grouping in the Bundestag has been out of frontline politics since leaving the Bundestag in 2009. But the 62-year-old announced his intention to replace Merkel within hours of the news that she would be stepping down. Merz reportedly fell out with Merkel after she replaced him as CDU/CSU group leader in 2002. He has been a chairman at Blackrock since 2016.

Armin Laschet, CDU

Laschet became state premier of North Rhine-Westphalia in 2017. His win marked a major defeat for Social Democrats in Germany’s 18 million-strong “coal” state. The Catholic and former journalist, 57, has been branded by his critics as “too nice for politics.” He is also one of the five deputies in the national CDU executive.

Julia Klöckner, CDU

Klöckner became agriculture minister in 2018 and has been CDU chief in the western state of Rhineland-Palatinate since 2011. In 1995, before entering politics, she became Germany’s “Wine Queen.” Like Spahn, she belongs to the CDU’s conservative wing. She raised eyebrows in 2016 when she proposed an alternative plan to Merkel’s refugee policy.

Peter Altmaier, CDU

Altmeier, known as “Merkel’s bodyguard,” has supported the chancellor’s centrist policy platform on multiple fronts. Originally from Saarland, Altmaier first worked for the European Union before entering the Bundestag in 1994. The former environment minister turned economy minister is renowned for his kitchen diplomacy and being a stickler for policy detail.

Ursula von der Leyen, CDU

Von der Leyen became defense minister in 2013 after serving a stint as labor minister. Despite her reform efforts, defense spending remains stubbornly low and the military continues to suffer from widespread equipment shortages. Von der Leyen, who studied in the United States and Britain, supports a larger role for Germany abroad and improving links between national armies in the European Union.

Volker Bouffier, CDU

Volker Bouffier has been the premier of the central state of Hesse since 2010. He formerly served as the state’s interior minister and has twice “won” Big Brother awards from German data privacy advocates for propagating closer surveillance methods by police. The 66-year-old currently heads a CDU-Greens state government in Hesse and is a deputy chairperson in the national CDU executive.

Wolfgang Schäuble, CDU

Schäuble is one of the CDU’s most experienced politicians. He is well-known throughout Europe for his time as finance minister from 2009 to 2017, when he took a hard line against the Greek government. But Schäuble’s decision to give up a senior ministerial role to become president of the German parliament suggests the 75-year-old has already entered the twilight of his political career.

Markus Söder, CSU

Söder is Bavaria’s state premier and a member of the CDU’s sister party, the CSU. He is therefore ineligible to replace Merkel as CDU head. But Söder, who became premier earlier this year, could become chancellor if the CDU and CSU together nominate him as their combined candidate for the 2021 election. He has been a vocal critic of Merkel’s refugee policy and Greece’s membership of the euro.

Author: Ian P. Johnson, Alexander Pearson

Source: https://www.dw.com/en/europe-without-angela-merkel-is-possible/a-46081728

The post ‘Europe without Angela Merkel is possible’ first appeared on Garner Ted Armstrong Evangelistic Association.