The Other Side of the Austerity Program - German Economy Stands to Lose
Economics / Germany Dec 13, 2011 - 03:32 AM GMTBy: Asha_Bangalore
A fiscal austerity program has been adopted as the cure all for the ills of the indebted members of the eurozone. The flipside of this policy is that in the short-run Germany’s exports of goods and services will take a deep hit. Exports of goods and services from Germany reached a record high of 51% in the third quarter of 2011 (see Chart 1).
A large part of these exports are intra-regional exports, implying that projected setbacks to economic growth in countries implementing fiscal austerity measures would work adversely for German economic growth in the near term. Real GDP growth in Germany has slowed to 2.0% in the third quarter following a 3.3% pace in the first six months of the year.
Asha Bangalore — Senior Vice President and Economist
http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.
Copyright © 2011 Asha Bangalore
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.
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