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Economic growth: Relax!

2019-08-14T14:52:22.613Z

Will millions again be unemployed soon, is the German economy slipping into a crisis like the end of the 1990s? No need to panic - if the government acts now.



Do you have just this zero-year feeling? Recession, tail light, negative growth. These are the news of today and they recall the time after the millennium, when in Germany more than five million people had no work and the country was considered the sick man of Europe.

Are we just witnessing the "crash of a superstar" as it was formulated in a popular book at the time?

No. The German economy contracted in the second quarter, and companies' orders indicate that things could not get much better in the remainder of the year, especially as the trade conflict between the Americans and Chinese worsens and a disorderly Brexit comes , Both meet the export-dependent German companies and so can from this mixed situation quite a downturn with rising unemployment.

However, there is no reason to panic, for three reasons:

First, the treasuries are well filled and the money is cheap. Social insurance, for example, has accumulated considerable cash reserves in the good years. Therefore, contributions to unemployment insurance do not have to be increased immediately if additional burdens due to an increase in unemployment are to be borne. That relieves the workers.

The location is better than the mood

And if the prospects deteriorate so much that the state should take countermeasures with a credit-financed stimulus package, this would be easily possible. Investors even pay to lend to the federal government capital. Even if companies dismiss people, there are more female engineers, construction workers and architects. So far, the lack of skilled workers meant that public money could not be retrieved. That would change in a downturn.

Second, the situation is better than the mood. It is remarkable how suddenly only the deficits of the business location are discussed. There is: The Internet is too slow, the car industry has overslept the technological change long, the schools are missing the teachers. That is only part of the truth.

According to a ranking of the World Economic Forum, Germany is currently the most innovative economy in the world. Germany is the country with the highest number of applications to the European Patent Office after the United States and before China or France. In addition, the government debt ratio is lower than in most other industrial nations.

Investment package for ten years

Third, Germany is still a country where political institutions are working halfway. Certainly the last ten years have not necessarily been marked by great ambitions in terms of economic policy. But after all, in Germany, unlike in the US, Italy or Britain, the stability of the political system as a whole does not appear to be in danger.

What follows from these three points? The decline in gross domestic product shows that the days are over when politicians did not have to worry about the economy. But that does not have to be a big crisis if a few quick decisions are made now. Firstly, the coalition should quickly agree on a stimulus package that can be activated if it goes further down.

Secondly, it should set the direction in climate policy so that companies can adapt to it. Thirdly, it should use the low interest rates and set up a ten-year investment package and secure it financially, so that the German economy is prepared for the upcoming ecological transformation of global economic relations.

Source: zeit

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