Published On: Mon, Aug 19th, 2019

Germany recession fears: What could Germany’s economic crisis mean for the EU?

Germany could crash into recession after a decline in exports dampened the nation’s economy, which shrunk by 0.1 percent in this year’s second quarter. When Germany’s statistics were revealed on Wednesday, shock waves rippled through stock markets in Europe and the rest of the world. And as Germany has the Eurozone’s biggest economy, how could the crisis affect the European Union?

Although it’s hard to predict exactly how the EU will be affected by Germany’s economic crisis, there is little chance the bloc will thrive when it’s largest member state is struggling.

Germany accounts for more than a quarter of the EU’s output, with its 83 million people.

The European nation is counted by many of the bloc’s countries as their No 1 trading partner.

This include France, Italy, the Netherlands, Belgium, Slovakia and Sweden.

READ MORE: Germany’s ‘deep’ recession to plummet EU into ‘existential’ crisis

Suppliers throughout Europe earn much of their revenue by selling to big German manufacturers like Daimler, Siemens and ThyssenKrupp.

Katharina Utermöhl, senior economist at the German insurer Allianz told New York Times: “If the largest member state is affected this will also start to weigh on the euro area as a whole because of the close economic relations.”

Should the EU sustain more economic blows, such as a no deal Brexit or a meltdown in Italy, “the risk of a recession is rather high”, according to Ms Utermöhl.

Other economists are even more pessimistic, with Carl Weinberg, the chief international economist at High Frequency Economics saying: “Euroland is headed for a recession.”

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