Germany's Economic Growth: On a Stable Path...

Remember the days when the German media forecasted ultimate disaster for the U.S. economy as a result of President Bush's tax policy?

This just in: latest IMF statistics indeed prove the country's miserable economic condition.

The country is Germany.

Germany's economy is projected to grow a whopping 1.3 % in 2006, while the 2007 growth forecast virtually describes an exploding economy (+1.0 %) (U.S.: 3.4 % resp. 3.3 %). The 2006 and the 2007 IMF growth forecasts for Germany are the lowest of all countries and regions (page 2). The current 2007 forecast is 0,5 % below the September 2005 forecast for 2007. Things start bad and get worse.

(Out of pity, I will refrain from commenting on Germany's unemployment figures (table 1.4).)

I guess this sinister Bush guy somehow found a way to harm the German economy...

But there are brighter sides of the picture: German corporate taxes are second highest in Europe (36 % on average). Finally a financial statistic where Germany ranks among the top countries!

Another area where Germany is tops: Unemployment administration!

In other news: German media congratulate President Bush for superior economic policies.

Well, probably NOT... After all, by definition this stupid cowboy from Texas can do no good...

Comments

[Pat Patterson]

I'd be curious to here what the German business and or the finiancial newspapers and magazines have to say about our respective economies? There always seems to be a huge disconnect between what popular press and the business press cover.

[Marian Wirth]

Pat Patterson,

as far as I can see from my subscriptions of two business press newsfeeds ("Handelsblatt" and "Financial Times Deutschland") and 10+ ususal, non-business newsfeeds, there is no significant difference between business and "popular" news coverage.

Both the business and popular press get their headlines from the news agencies, and the headlines are always something like "U.S. unemployment rate 'surprisingly' low in March" or "growth of U.S. economy 'unexpectedly' stable in 4th quarter".

Surprise, surprise...day in, day out.

[David J.]

I read the German business daily Handelsblatt on a regular basis for a few months. Their news articles are ok but their commentaries show the same economic illiteracy and -sometimes- anti-american bias that is common in the German media.

E.g. they had a column in which the author called the numbers of people without health insurance in the US a disgrace. Of course he never asked himself the question if and how these people get medical services. After all, health care is all about being insured, not getting medical treatment, right?

The same author also wrote about America's "addiction" to oil which -in a way I do not understand, so let's just say: somehow - fosters terrorism by giving money to Arabs. So to him (as to a certain US president) using the cheapest energy source is not sound economics but an addiction.

And from time to time they print the usual "the poor get poorer/stay poor/don't get rich fast enough" stories about the US. Favorite "native" US sources seem to be NYT and Washington Post.

[James]

@David J

The problem here in Germany is that even the rich are getting poorer (definately true when compared to US/Canada and Australia).

* Over 50% of the economy here in Germany is the government.
* They don't realise that jobs and wealth are created in the free market, not civil servents jobs.
* That Asia and Eastern Europe will be providing most of their future competition, not North America.
* Taxes will be going up in 2007 here: VAT will jump from 16 to 19%. Funnily, Germany will spin this as a positive as goods will no longer be affordable to ordinary Germans and hence exports will increase! Can anyone say Japan in the 1990s?

[neocon]

James, do you have some links to back it up? (50% of the economy is the government)
It would be quite interesting if there were such statistics

[PacRimJim]

Arbeit macht frei.

[Dan Kauffman]

I'd be curious to here what the German business and or the finiancial newspapers and magazines have to say about our respective economies?
****************************************************
Why they probably emphasis the superiority of the European desire for "qualtiy of life" over the American sordid pursuit of lucre. ;-)

[Pat Patterson]

@Marian Wirth and David J.
Thanks for the posts. I guess I was hoping that the German business press was more rational than the popular press.

[Pamela]

I'm not sure I have the resources to figure this out myself (EU, OECD, etc.) - does anyone have any idea about the effect EU regulations have on the economies of individual countries? I know there is some discussion w/in the EU of 'an EU tax' which just makes me shake my head. I'm also aware that there is some disenchancement with the euro (especially in Italy).

But from the little bit I am aware of (and I'm no economist, that's for sure) I am under the impression that economically the EU is at least part of the problem.

[George M]

I know one German who will be working a 100 hour week this summer.........my nephew.....he is a cop in Hessen.

His boss has put him on notice that all vacation is frozen until after the World Soccer Championships.

There is already a police intelligence report that 30,000 British soccer hooligans are going to be camping just outside of Frankfurt.

Given soccer hooligans, islamic terrorist and racial tensions, (check out the murdered African immigrant in SPON or Stern), the police are going to be very busy this summer.

[David J.]

@Pamela

Marian Tupy of the Cato Institute published a paper on the economic impact of EU regulations in the Eastern European countries that joined the EU in 2004.

http://www.cato.org/pub_display.php?pub_id=1348

[Dave]

George M

Thats the reason why it was such a good idea by the conservatives to enable the use of our military in case of civil disorder. But there were still too many old politicians too afraid of that idea, so the proposal didnt make it (before the world cup championship).

[Pat Patterson]

@neocon

I found one source for the percentage the public sector takes from the total GDP of Germany. Total GDP for 2005 was 2.764 trillion(adjusted) while the public sector spend 1.362 trillion. Very odd but exactly 50%. It might seem hard to believe a non-wartime economy would take so much but bear in mind that the US spends almost 25% of its 12.7 trillion GDP on the public sector.

www.cia.gov/cia/publications/factbook/geos/gm/html

[George M]

Dave,

"Thats the reason why it was such a good idea by the conservatives to enable the use of our military in case of civil disorder. But there were still too many old politicians too afraid of that idea, so the proposal didnt make it (before the world cup championship)."

What ever happened to the Bundesgrenzschutz? I thought they were supposed to fill in this gap. There used to be three battalion size units stationed in Hesse alone.

Best soccer wishes,
GM

[Sock Puppet of Doom]

Stable as in reaching room temp? With energy costs almost doubling the trend od stagnant growth for Europe is disturbing.

[Dave]

George M

As far as I can see they are within the security planning. But the military has more men and is probably more useful "wenn´s brennt". Furthermore, such a demonstration of power would disencourage potential hooligans I guess.

[Dave]

btw: If you dont find anything about the Bundesgrenzschutz anymore - they are called Bundespolizei now. They changed their name since most of our neighbours belong to the EU now, and are now responsible for "Schleierfahndung" thoughout the country. So practically, they made a new police unit out of a former border patrol institution.

[Pamela]

David J, thanks for that link.

Speaking of economic vulnerability, just how much of Germany's natural gas is coming from Russia? I've read it's about 40% for the EU in total, but haven't seen a country by country breakdown.

Aren't you just a tad concerned about Russia using that pipe as a geopolitical hammer?

[Scott_H]

"Aren't you just a tad concerned about Russia using that pipe as a geopolitical hammer?"

Pamela, you mean like this?

"MOSCOW Jan 1, 2006 (AP)— Russia's natural gas monopoly halted sales to Ukraine in a price dispute Sunday and began reducing pressure in transmission lines that also carry substantial supplies to western Europe.

"Ukraine's natural gas company Naftogaz acknowledged the reduction by Russia's Gazprom.

"Gas is not flowing at all through some transit routes, which can lead to a fall in pressure in all the pipelines and limit the overall supply of gas to Ukraine and Europe," Naftogaz spokesman Eduard Zaniuk said."

"In Washington, U.S. State Department spokesman Sean McCormack said in a statement that "such an abrupt stop creates insecurity in the energy sector in the region and raises serious questions about the use of energy to exert political pressure."

http://abcnews.go.com/International/wireStory?id=1461996

[George M]

Dave,

Thanks for the update on the old BGS. I did not know that they became an other enity.

Thanks,

George M.

[joe]

If you review the economic accomplishments of Germany, it is very stable.

This is good. Instability causes confusion and makes Germans grumpy. This is the opposite of being happy. Not being happy is not good.

It would appear while the new government in Berlin has managed to talk a good geopolitical game, domestic policy is just to difficult to address. The best course then is to do nothing and maintain stabilty.

Now everyone is happy. Even the french.