Although the US. economy remains anemic, other major economies are in even worse shape. While Japan’s problems have been around for over a decade, Germany’s economy is now showing major structural imbalances as well.
Germany’s GDP was flat in the fourth quarter and up only 0.2% for all of 2002. Growth for the last seven quarters was virtually non-existent as weakness was pervasive. Consumer confidence is at the lowest point since 1995, and the government is trying to avoid violating the EU’s budget deficit limit for the second straight year. Net exports are being hurt by weakness in the country’s major export markets and strength in the Euro, which has risen 24% over the past year.
The risks are still on the downside as a result of the global geopolitical situation, soaring energy prices, low consumer confidence and increasing unemployment. In addition the governing Social Democratic Party and Green Party coalition have agreed to boost taxes and cut spending, adding a further burden to an already deteriorating economy. Structurally, the economy is also suffering from a rigid labor market, a heavy burden of mandated government welfare spending, and burgeoning costs for social security and healthcare. Economist Hans-Joerg Naumer of Deutscher Investment Trust stated, "Stagnation will continue. Exports will be worse than last year and domestic demand will be the weak point in the economy.”
As a result of the continued stagnation both in Germany and the rest of the EU, ECB President Duisenberg has given up on the prospect of recovery, and appears ready to throw in the towel and reduce interest rates. This is likely to happen at the next meeting of the central bank on March 6, but at this point it seems too little and too late to turn the economy around anytime soon. With Japan still in a deflationary downtrend, it is highly improbable that the U.S. economy will get outside help. In fact most global economies are banking on the U.S. to bail them out by buying more of their exports, but that is looking less and less likely.
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
