Germany Running On Fumes With A Possible Recession Coming


Germany’s export-dependent economy is feeling the rippling effect of trade disputes and pressure to inject cash.

Germany is ready to stimulate their economy, if needed, due to German companies experiencing the aftermath of trade disputes as well as the auto industry struggling with the global shift to electric cars, according to The Washington Post

Germany’s exports account for nearly half of the nation’s gross domestic product, making their market highly sensitive to the ups and downs of the global economy. The U.S. trade disputes with China and the European Union have caused German exports, in the second quarter, to slump 1.3%. However, unemployment remains at a record low of 5% and has helped balance manufacturing weakness. 

Their economy barely holds on as substantial risks could create a snowball effect and carry an adverse effect. 

Carmakers and parts suppliers have struggled to shift from the combustion engine to the electric motor, and if U.S. President Donald Trump follows through with his threat to set tariffs on European cars, Germany’s auto sector will suffer. 

Yet, Germany’s commitment to a balanced budget provides a positive outlook for their economy. Their public debt now sits at 60% of their gross domestic product, the lowest of any major European economy, from 83% in 2010. 

Finance Minister Olaf Scholz has said that the government is ready to deploy a stimulus package worth 50 billion euros ($55 billion) that includes subsidies for car buyers and support for companies, yet Bundesbank President Jens Weidmann, who represents Germany of the European Central Bank council, openly opposes the stimulus drive. 

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Economics, Finance and Investing