Thursday

5th May 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. EU Commission proposes visa-free travel for Turkey
  2. Iceland in court for not respecting EU laws
  3. Sweden registers more asylum application withdrawals
  4. German Pegida leader convicted of inciting hatred
  5. ECB expected to stop printing €500 notes
  6. Spain dissolves parliament for 26 June election
  7. Germany to legalise cannabis for medicinal use
  8. Hungary to hold migrant quota referendum by October

Stakeholders' Highlights

  1. Centre Maurits CoppetiersBrexit Could Increase Support for Independence in Pro-EU Scotland
  2. European Music CouncilRegister Now for the 6th European Forum on Music in Wroclaw, European Capital of Culture 2016
  3. Belgrade Security ForumJoin Our Team for the 6th Belgrade Security Forum. Apply Now! Deadline May 20
  4. European Roundtable of IndustrialistsCompanies Make Progress on Number of Women in Leadership Roles
  5. Counter BalanceParliament Gets Tough on Control EU Bank's Funds
  6. ICRCSyria: Aleppo on the Brink of Humanitarian Disaster
  7. CESIWorld Day For Health and Safety at Work: Public Sector Workers in The Focus
  8. EFABasque Peace Process-Arnaldo Otegi Visits the European Parliament
  9. EscardioChina Pays Price of Western Lifestyle With Soaring Childhood Obesity
  10. Centre Maurits CoppetiersThe Existence of a State is a Question of Fact, Not a Question of Law
  11. ICRCSyria: Aid for Over 120,000 People Arrives in Besieged Town Near Homs