Tuesday

30th Aug 2016

German economy feels chill of eurozone recession

  • Berlin: German President Joachim Gauck said Germans would be ill-advised to think the worst is over (Photo: Valentina Pop)

Germany's economic growth has slowed to a meagre 0.2 percent, as most other eurozone countries are in recession and austerity measures are taking their toll on German exports to southern countries.

The eurozone's overall economy shrank by 0.1 percent compared to the previous three months, the bloc's statistical office (Eurostat) reported on Thursday (15 November). The 17-nation area had already slipped into recession over the summer, with Greece, Portugal, Spain, Italy, Cyprus and the Netherlands continuing the negative trend.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

France rebounded to 0.2 percent growth compared to stagnation and recession in the previous quarters, and so did Finland and Estonia. The tiny Baltic state boasted a 1.7 percent growth rate, the highest in the eurozone.

Germany's economy meanwhile has slowed from 0.5 percent growth in the first quarter to 0.3 percent in the second and 0.2 in the third, with the country's central bank warning of stagnation and even recession in the months to come.

Speaking at an economics forum in Berlin on Thursday, German finance minister Wolfgang Schaeuble made the case for "sustainable growth" - meaning modest growth rates not based on real estate bubbles or consumer credit.

"We must strive to become a stability union, where fiscal rules are respected" Schaeuble said, one day after massive protests and general strikes took place in Portugal, Italy, Spain, Greece and Belgium against what is seen as a German-led austerity drive.

"I have great respect for the demonstrations in these countries," the German minister said. But he continued to make the case for structural reforms to make an ageing and costly Europe more competitive in relation to China and India.

But the centre-right coalition itself has come under fire from the opposition for allegedly "wasting money on pre-election gifts" and doing the opposite what it is preaching to bailed out countries by passing a controversial subsidy for parents who stay at home to raise their children.

Private indebtedness is meanwhile also going up in Germany, with official figures showing that one in ten Germans is unable to pay their debt - a three-percent increase compared to last year.

Speaking at the same forum, President Joachim Gauck said Germans would be ill-advised to think the worst is over. Despite encouraging growth and employment rates, "we can feel it everywhere, something is deeply wrong," he said.

Changing rules and regulation to stem financial speculation and abuse is a good thing, Gauck said. "But just as urgent is to check our own inner beliefs, our own motives and attitudes. This process seems to be halted," he said.

News in Brief

  1. Turkey 'probably' won't join EU until Erdogan goes
  2. I wouldn't bet on Brexit, says commissioner Oettinger
  3. EU orders Apple to repay up to €13bn in taxes
  4. UK to reject changes to Calais border deal
  5. Five arrested over Brussels lab explosion
  6. Former Portugese PM leads race for UN job
  7. German police: 9,000 migrant children are missing
  8. Spanish socialists to oppose Rajoy's bid to be PM

Stakeholders' Highlights

  1. EuridThe 2016 .eu Web Awards is a Chance to Make Dreams Come True so Vote Today !
  2. Nordic CouncilNordic-Baltic Co-operation Vital in Turbulent Times
  3. GoogleBrussels: Home of Beer, Fries, Chocolate and Google’s Policy Team - follow @GoogleBrussels
  4. HuaweiSeeds for the Future Programme to Bring Students to China for ICT Training
  5. EFASpain is Not a Democratic State. EFA Expresses Solidarity to A. Otegi and EH Bildu
  6. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  7. HuaweiMaking Cities Smarter and Safer
  8. GoogleHow Google Makes Connections More Secure For Users
  9. EGBAThe EU Court of Justice Applies Proportionality in Assessing Gambling Laws
  10. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  11. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  12. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER