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European Economic Growth: The Germans are downgrading

Posted April 9, 2008

Baltimore — (TFN): They may still be talking up the euro as a bastion of strength compared to the dollar. After all, everyone believes that Europe’s economic base is strong. After all, there are no “twin deficits”. Germany in particular likes to pride itself on being “Exportweltmeister” — export world champion.

But how’s it going considering the Konsumweltmeister and engine of global growth, the U.S. economy, is starting to look long in the tooth?

The International Monetary Fund (IMF) has downgraded its projections for German GDP growth to just 1.4%. Given Europe’s sad history of economic expansion over the past decade, that’s still not bad. For 2009, expectations are comfortably lower, with just 1%.

Predicted inflation rates are 2.5% for this year and 1.6% next year.

The bad news: Any 10% the US dollar may still shed against the euro will reduce economic growth by another tenth of a percentage point.

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Posted by J. Christoph Amberger · Filed Under News that Matters 

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