Germany’s economy: The sputtering engine

“THE world cannot afford a European lost decade,” says Jacob Lew, America’s treasury secretary. The latest European figures were uninspiring. In the third quarter the euro zone grew by just 0.6% at an annualised rate. This sluggishness was not primarily due to the countries hit hardest by the crisis—Greece’s economy grew faster than any other euro-zone country, and Spain and Ireland are recovering. Rather, it is the core countries that are exhausted—and few more so than the biggest, Germany. It grew by just 0.1% in the third quarter, after contracting by the same amount in the previous three months.Angela Merkel, the German chancellor, has been subject to a rising chorus of foreign criticism. Germany should do more to stimulate domestic consumption and investment, goes the refrain. This would help countries like France and Italy as they undergo tough structural reforms. Higher imports would also reduce Germany’s current-account surplus, the largest in the world and a cause of imbalances within Europe and beyond. Stimulating demand would push up prices, which could save the euro zone from tipping into deflation. Prices in the zone rose at an annualised 0.4% in…

Link to article: www.economist.com/news/europe/21633832-germanys-economy-getting-too-weak-pull-europe-out-its-crisis-sputtering-engine?fsrc=rss%7Ceur

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