German GDP up by 3% last year

[Tender Branson]

By DAVID McHUGH and KIRSTEN GRIESHABER
Associated Press
BERLIN - January 11, 2012

Germany's economy slipped into reverse in the last quarter of 2011 in spite of showing strong overall growth for the year of 3 percent, the country's Federal Statistics Office said Wednesday.

While the overall 2011 growth figure was as expected by analysts, the statistics office also said that the German economy likely contracted by 0.25 percent in the last quarter of 2011. The exact figure for fourth quarter growth is due only in mid-February and could be revised.

Joerg Kraemer, the chief economist for Commerzbank, expressed little surprise regarding the slowdown and told German news agency dapd he expected the economy to shrink in the first quarter of 2012 as well. That would put it in a recession, technically defined as two consecutive quarters of economic contraction.

Most recent economic indicators suggest 2012 will be a tough year, both for Germany and the rest of Europe.

"While the German economy grew very strongly in the last two years, this year's growth will be much lower, especially because of the crisis in the eurozone," Ferdinand Fichtner, the head of the DIW economic institute, said in a statement.

The country's annual growth rate was achieved in spite of the financial crisis in Europe which has other economies such as Greece, Spain and Italy struggling with huge debts and slumping output.

"The German economy again grew robustly in 2011," the statistics office, Destatis, said in a statement.

Germany's 2011 growth puts it in a small group of strongly performing eurozone countries, along with Finland, Austria, Slovakia, and Luxembourg. France should see more moderate growth of around 1.7 for the year, according to the International Monetary Fund, while output stagnates amid high unemployment in Spain and Italy, the recent focus of the debt crisis.

Greece and Portugal, bailed out to avoid default, are in deep recessions.

Germany should outperform the United States, which announces 2011 GDP data on Jan. 27; the IMF has estimated 1.6 percent for the year. The figure remains far short of emerging economies such as China, estimated at 9.5 percent, and India at 7.8 percent.

But it did help bring Germany's deficit down to only 1 percent of gross domestic product, well below the limit of 3.0 percent enshrined in the eurozone's rules.

Germany's strongest growth was seen in the first six months of the year, when consumer spending rose 1.5 percent — the biggest increase in five years.

In 2010, the German economy grew by 3.7 percent after a painful contraction of 5.1 percent in 2009, which was by far its worst showing since World War II.

Exports were also strong, according to Destatis, growing 8.2 percent compared with the year before. Imports rose 7.2 percent.

http://abcnews.go.com/Business/wireStory/german-economy-grew-percent-2011-15337006

http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/press/pr/2012/01/PE12__010__811

[opebo]

3% is fantastic for a rich, developed economy with a shrinking population.

[Beet]

Agreed. Congratulations to Germany for a very enviable performance.

[republicanism]

Ask our workers who much they get from that GDP growth.

Last year, real income grew significantly for the first time in years, after basically stagnating since 1992/1993. Hopefully, the unions will show their balls in 2012 and grab some of the cake.

Our growth wouldn't be possible without the Euro and the export advantage it gives us. So we should just pay Greece' debt and than let them free, i.e. leave the Eurozone.
It is our charge in exchange for the massive benefits we take from the Euro.

[Simfan34]

3% is fantastic for a rich, developed economy with a shrinking population.

Indeed. Quite respectable growth. Five would be a stellar rate in my mind- I call it "Pawlenty growth". If any of these countries could sustain 5% GDP growth per annum for a decade, they would be able to guarantee their importance in the world economy for a decade.

[opebo]

3% is fantastic for a rich, developed economy with a shrinking population.

Indeed. Quite respectable growth. Five would be a stellar rate in my mind- I call it "Pawlenty growth". If any of these countries could sustain 5% GDP growth per annum for a decade, they would be able to guarantee their importance in the world economy for a decade.

What does Pawlenty have to do with it?

Anyway sustaining 5% growth per annum for a decade would be fantastic for most Asian or Latin American countries - incredibly unlikely in developed areas like Europe.

Last year, real income grew significantly for the first time in years, after basically stagnating since 1992/1993. Hopefully, the unions will show their balls in 2012 and grab some of the cake.

Stagnant or falling income for workers is a necessary element of achieving growth in the competitive global economy.

[Wonkish1]

Ask our workers who much they get from that GDP growth.

Last year, real income grew significantly for the first time in years, after basically stagnating since 1992/1993. Hopefully, the unions will show their balls in 2012 and grab some of the cake.

Our growth wouldn't be possible without the Euro and the export advantage it gives us. So we should just pay Greece' debt and than let them free, i.e. leave the Eurozone.
It is our charge in exchange for the massive benefits we take from the Euro.

You do know that the Euro acts like a huge monetary tax on your entire population that is directly handed to your exporters, right?

Its kind of funny to see some folks(who see themselves as left of center) espouse a system that is more "supply-sider" than even most supply siders themselves are. But its not like you should expect all that many people to stay consistent in their beliefs.

[republicanism]

You do know that the Euro acts like a huge monetary tax on your entire population that is directly handed to your exporters, right?

What does "monetary tax" mean? Sales tax? Property tax?
I don't know the term and didn't find a good explanation on the net.

But anyways, yeah, the German exporters are by far the greatest profiteers of the Euro. German goods are ridiculously cheap on the world market thanks to the Euro, and our disastrous wage policy.

Our schools and Unis are rotting under our asses, we privatize away rail, hospitals and waterworks, wages are stagnating, child poverty is the highest since the 70s - but economy is growing. Yeah!

Its kind of funny to see some folks(who see themselves as left of center) espouse a system that is more "supply-sider" than even most supply siders themselves are. But its not like you should expect all that many people to stay consistent in their beliefs.

What has supply-side economics to do with the Euro? It is quite the opposite: Supply is neglected, exports are supported.

[Wonkish1]

You do know that the Euro acts like a huge monetary tax on your entire population that is directly handed to your exporters, right?

What does "monetary tax" mean? Sales tax? Property tax?
I don't know the term and didn't find a good explanation on the net.

But anyways, yeah, the German exporters are by far the greatest profiteers of the Euro. German goods are ridiculously cheap on the world market thanks to the Euro, and our disastrous wage policy.

Our schools and Unis are rotting under our asses, we privatize away rail, hospitals and waterworks, wages are stagnating, child poverty is the highest since the 70s - but economy is growing. Yeah!

Its kind of funny to see some folks(who see themselves as left of center) espouse a system that is more "supply-sider" than even most supply siders themselves are. But its not like you should expect all that many people to stay consistent in their beliefs.

What has supply-side economics to do with the Euro? It is quite the opposite: Supply is neglected, exports are supported.

Quite simple really. A "monetary tax" is the artificial devaluation of a currency to achieve export competitiveness. The devaluation makes the purchasing power of the entire country poorer because the true value of that countries currency would be higher.

So under the Deutsche Mark you would be able to afford more. The difference between the Euro and the Deutsche Mark in purchasing power is a tax on all of your citizens.


You don't know much about what "supply side" economics means do you? At its core they are just focused on lowering the tax liability of companies so that lower cost of doing business makes them more competitive and boosts their supply of goods. In the most extreme examples(when countries try to almost be mercantilist in their approach to the world) some countries have gone as far as defacto taxing their population and then giving the money to their largest companies. Japan, China, and Germany are the big 3.

The affect of that is to practically be more supply sider than even supply siders are.

And by the way you are demand side if your encouraging consumption in your home company. You are supply side when you are encouraging production for other countries + your home countries consumption. It doesn't mean that you want to just keep excess inventory in your country so prices fall. That would be profoundly stupid.

[republicanism]

Quite simple really. A "monetary tax" is the artificial devaluation of a currency to achieve export competitiveness. The devaluation makes the purchasing power of the entire country poorer because the true value of that countries currency would be higher.

So, what China does on a grand scale. And what happens to Germany through the Euro, on a lower scale as well.

So under the Deutsche Mark you would be able to afford more. The difference between the Euro and the Deutsche Mark in purchasing power is a tax on all of your citizens.

Nope, under Deutsche Mark we couldn't live on our exports as we do, since a Deutsche  Mark would enhance (right term?) big time.

You don't know much about what "supply side" economics means do you?

I do, but I got it wrong in English, my English language skills are limited. Sorry,

I did some research and found out that supply-side-economics meant the very opposite of what I meant. Surprisingly, the German wikipedia page "Nachfragepolitik" is not translated, and the online dictionaries do a bad job as  well-
So, I'll tell you that I'm talking about is "Keynesianism", though that's not really my point.

At its core they are just focused on lowering the tax liability of companies so that lower cost of doing business makes them more competitive and boosts their supply of goods. In the most extreme examples(when countries try to almost be mercantilist in their approach to the world) some countries have gone as far as defacto taxing their population and then giving the money to their largest companies. Japan, China, and Germany are the big 3.

The affect of that is to practically be more supply sider than even supply siders are.

Now knowing what supply-side means: Yeah, you're right. That's why German ecomomic policy has been a mess for the last 25 years.

[Wonkish1]

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Today Germany probably is worse than China. If China removed the peg today the RMB would actually probably fall not appreciate given the financial turmoil in China as we speak.

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I wonder if you fully realize the argument that you are making. You are essentially saying that you are more wealthy because you give money to businesses and they turn around keep the economy prosperous. If you want to keep on making that argument you should probably ditch any notions that you are left of center. If the Deutsche Mark returned the currency would immediately appreciate. The better exchange rate would mean that you could buy a lot more with your pay check, but of course your exporters would also suffer in the process.

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Understood!

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Well everything else in your country is pretty Keynesian, but the Euro is not a small issue. Its a pretty big one. And its amazing to see a German with a -6.3 econ score talking about the virtues of imposing a "monetary tax" on its population that is at least partially handed to its largest exporters.

It also acts as an indirect monetary subsidy from Germans to the rest of the Eurozone and the rest of the world by making German goods cheaper for the rest of Europe and beyond. So every day of the Euro's existence you have been indirectly subsidizing Italian, Greek, French, Portuguese, etc. people and to even some extent the Swiss, British, and even American people indirectly. It came out of your paycheck with a depreciated currency and went to us with a cheaper price tag.

So in a weird way thanks for partially subsidizing us(granted in our case its more China than you).