Germany: GDP decrease in the first quarter. How will he ask for an end to austerity?
Germany's growth figures are released today and what has come is not exactly good. The lockdown that Merkel tried to apply with the utmost seriousness possible for a federal country did not bring good to Berlin, with a nice drop:
German GDP growth was 1.8% in the first quarter of 2021, after a very poor fourth quarter of 2020, with only + 0.6%. The result is slightly worse than a preliminary 1.7% decline estimate. Europe's largest economy is back in contraction after a partial recovery in the second half of 2020, due to restrictions imposed to contain the coronavirus pandemic. Household consumption decreased by 5.4% and investments in machinery and equipment decreased by 0.2%, so it is evident that we have a big problem of personal consumption. In addition, net external demand contributed negatively to GDP as imports increased by 3.8% and exports increased by only 1.8%. Meanwhile, gross fixed investment in the construction sector increased by 1.1% and government spending by 0.2%, the first indication of a certain growing housing bubble. Compared to the fourth quarter of 2019, the quarter before the coronavirus crisis hit the economy, GDP was 5.0% lower. source: Federal Statistical Office.
In general, the German GDP has remained well below the level of 2019 and the forecasts for 2021 and 2022 see, at this point, the continuation of this reduction. Attention we are not talking about the forecasts of the Commission or the German government, but of those, much more realistic, of the market.
At this point, Germany finds itself at a crossroads:
- worry, as it did in the past, only about inflation, now at 2% and then start a restrictive and fiscally austere monetary policy, to cool the economy, but at the cost of higher unemployment and an export of this decrease on EU countries;
- leave the target of inflation and focus on growth, risking a negative communicative impact on a public opinion that still seems linked to visions of the past.
This will be the major problem facing our German neighbors and thus the whole European economy. A decisive choice, which will affect everyone's economies and lives
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The article Germany: GDP decrease in the first quarter. How will he ask for an end to austerity? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-decrescita-del-pil-nel-primo-trimestre-come-fara-a-chiedere-la-fine-dellausterita/ on Tue, 25 May 2021 08:17:27 +0000.