When I go from one European capital to another, talking to officials and senior politicians about the future of the euro, Germany feels less like another country than a different planet. In Madrid and Dublin, a euro-area banking union — the prerequisite for bailing out banks directly — is discussed as if it were a foregone conclusion. […]
Athens to Madrid: back to you Following the June 17 elections, Greece seems set to be governed by a broad, awkward coalition formed by the center-right New Democracy party, its historical rival, the center-left Pasok, and several small parties. A consequence of this electoral outcome is that Greece is less likely to exit the eurozone […]
Bloomberg: Arnab Das, managing director of market research and strategy at Roubini Global Economics, talks about fiscal and political integration in Europe, Italy’s public debt levels and European Central Bank monetary policy. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”
At the top of my list of to do’s for the past few weeks has been to update the post on Greek PSI that I wrote just before Christmas to include some more recent developments, such as the prospect of ECB participation. Last night, Peter Spiegel from the Financial Times (@SpiegelPeter) published the German government’s […]
The German economy is set to power ahead in 2011, as indicated by high-flying business and consumer sentiment surveys and full order books. The initially export-led economic upswing, which already received growing support from domestic demand in 2010, stands to broaden further given the positive outlook for investment activity and private consumption. Despite the contribution from the moderating external sector, GDP growth will remain significantly above potential, not least due to a sizeable carryover effect from 2010. RGE expects buoyant GDP growth in 2011, boosted by a sharp rebound in construction activity following the weather-related slump at the turn of 2010/11. Although the economic outlook remains favorable for 2012, the pace of economic expansion is set to slow as economic growth rates converge back toward the long-term average. We examine these dynamics in depth in our latest Outlook, available exclusively to clients.
For Germany’s Chancellor Angela Merkel, it is the best of times, and it is the worst of times. German employment last month reached a new post-unification high, and business confidence, export revenues and many other measures of economic vitality are all positive—for now. (RGE sees this growth tempering, however, and already Q3 GDP growth shows a severe slowdown). Nonetheless, Merkel has capitalized on Germany’s position as the only major developed country that is truly growing, seeing off challenges to her leadership of the Christian Democratic Union (CDU) this autumn and facing down anger from populists over the increasing cost of bailing out EZ PIIGS, much of it borne by German taxpayers.
The three Scandinavian countries recently published data for August manufacturing production. The message was clear: the seasonally adjusted manufacturing production index fell in all three countries. Denmark experienced a 6.6% m/m fall, while Sweden’s production volume fell by 4%, similar to the fall in the broader industrial production index. In Norway, manufacturing production decreased by 2.0% m/m in August. Production remains well below pre-crisis levels, particularly in Denmark and Sweden, which saw large drops in production during the recession.
Though the eurozone’s recovery from recession has been better than we initially envisaged, we see a set of external and domestic pressures—some persistent, some new—as potential threats to 2011 growth. As we discuss in the September update to our 2010 Global Economic Outlook, the standout performance of the core and Northern European economies, particularly Germany, alongside renewed weakness in the periphery is giving rise to a multispeed recovery. This adds a new set of risks—such as the implications of one-size-fits-all monetary policy—to the existing list.
In July 2010, German producer prices for industrial products jumped 3.7% y/y, the fastest increase since December 2008. Since the PPI measures price changes at an early stage in the production process and hence serves as an indicator for future price pressures before they trickle through to consumers, the data release stirred fears of inflation in Germany.
Editor’s Note: This is an excerpt from a larger RGE Analysis, “Uncertain Giant: Germany’s Changing Role in Europe” by Katharina Jungen and Michael Moran, May 24, 2010.
The events of the past several months in the eurozone have accelerated a dynamic that German policy makers—within Germany and among some of its allies—have tried for decades to smother. Since the end of the Cold War, which removed the existential threat of Soviet invasion from the political debate, Germany’s increasing share of EU GDP, coupled with increasing demands from the U.S. and others that Berlin shoulder more of a burden on the international stage, have encouraged a “coming out” process for German foreign policy.