Friday, October 10, 2014

Growth: The economy expanded – what Germany can do – Tagesspiegel

Growth: The economy expanded – what Germany can do – Tagesspiegel

10/09/2014 18:14 clock Carsten Brönstrup

The growth prospects decline now also in Germany. The question is what the government can do to strengthen the economy. There are several proposals. And some reservations.

In the spring were the most important economists hopeful. At two percent gross domestic product should rise this year and next, they were. Six months later disillusionment has returned. “We were too optimistic,” admitted Ferdinand Fichtner, chief economy of the German Institute for Economic Research (DIW), one on Thursday. In the autumn report they accept only 1.3 percent growth for this year and 1.2 percent next. In equity markets, this makes for a bad mood, the Dax lost for weeks in soil.



Why the growth is in Germany back so strong?

A lot has changed: The Ukraine-conflict and wars in the Middle East press on the mood of the company. The demand from the euro area, the main market for German companies does not take off, because large countries such as France or Italy not solve their problems. Result: The Export was as weak as for five and a half years, not more, purchase orders and production decline in August. Domestic demand also loses power – because companies invest too little and consumers in the face of crises together keep the money. And because the government controls a little-business policies of the mothers pension on retirement at 63 to the minimum wage. These “headwinds” you’ve underestimated, Fichtner said. But the introduction of the minimum wage of 8.50 euros will cost 200,000 jobs. And the retirement age to 63 in 2015 are expected to use about 150 000 people whose experience the farms then missing.



If Germany now faces a recession or deflation?

There is “no reason to panic”, said the economists. An economic crash like 2009 is not – it’s been just about a slowdown in economic activity. However, the situation was no longer as uncertain. “The risks to the global economy are significant,” says the report. In China, the housing bubble could burst, a new escalation of the euro crisis is possible, not exclude a halt in supplies of Russian gas. The greatest danger, however, from deflation. Permanently falling prices would get the European Central Bank only difficult to control. Therefore, they never pumped money into the markets, perhaps she buys soon government bonds to relieve banks and encourage lending.



Is now an economic program necessary?

2009 the government tried to stop the free fall of the economy with billion-expenditure. She gave billions for scrapping old cars and the rehabilitation of buildings. Today, such a stimulus package would be “out of place”, the institutions shall apply a the fall survey. They refer to the known issues such measures: spending pulses usually come too late and are not targeted – as it was by the way also the 2009th The car scrappage scheme used mainly foreign manufacturers, and the state money was still installed when the economy already back to full Tours ran

What can the government do to spur growth

Almost traditionally the Government advisers for lower taxes are advocating.? – even now. So the coalition should the additional revenue from the cold progression in recent years, around ten billion Euro, return to the citizens. Also, a longer working life and higher spending on education could provide more dynamic.

Most of the experts promise but a promotion of investments. They are too weak for years. Firstly, because the companies invest their profits abroad rather than to put this country in new machinery. On the other hand, because the state continually holds back with his spending. The problem is known -., A working group on Economic Minister Sigmar Gabriel (SPD) is therefore examining how private money can be better mobilized for public projects

For more investment of the state “is certainly budgetary scope”, says the fall report. The money could flow into the infrastructure or in early childhood education. The government wants to date increase their spending on infrastructure to five billion euros in this parliamentary term – this is the most skilled enough

What’s more important -.?, A debt-free budget or more growth

Increased spending would but the aim of Finance Minister Wolfgang Schäuble (CDU) run counter to 2015 should get a debt-free household. That is not bad, judged the Institute. The goal of break was a “prestige project” and “from an economic point of view is not currently mounted,” said DIW researchers Fichtner.

Schäuble warns strongly against ignoring the deficit rules of the European Stability Pact for growth. “Growth occurs when restore confidence in the euro-zone is growing,” he said at an event organized by the Bertelsmann Foundation in Washington. However, the investment must be given greater priority. On the edge of the fall meeting of the International Monetary Fund, the Minister gave the international critics right that the Euro-zone “deliver growth must ‘. But Germany was despite the weakening” the engine of growth in the euro zone. “Minister of Finance is in the United States of its” Austeritätspplitik “awaiting shearing due to objective criticism. Schäuble they rejected, saying, thinking, with a deficit increase one could stimulate growth, is a misconception.” This is the way in which we have destroyed the euro zone. “denies the risk of deflation Federal Finance Minister. “There are no signs of deflation.” deflation in these figures is too high.

a courageous step will Gustav Horn go. He is head of the union-IMK Institute and does not belong among the government -Gutachter on. “We need a demand-pulse,” he said. € 20 billion to mobilize was possible. Fixation on the black zero is a “political self-blockade”. (With babs)

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