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Germany growing...for now

Tuesday, Apr 15, 2014 - 01:40

Apr. 15 - Germany presents its economic outlook as recovery begins to take hold in the euro zone. But as Ivor Bennett reports there are obstacles ahead - not least the crisis in Ukraine.

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The stern face says it all. Germany's growing alright, but for how long? Even GDP increases of 1.8 percent this year and 2 percent next weren't enogh to raise a smile on the face of Sigmar Gabriel. For Germany's economy minister, the problem of Ukraine is looming large. (SOUNDBITE) (German) GERMAN ECONOMY MINISTER AND VICE CHANCELLOR, SIGMAR GABRIEL, SAYING: "We - the Chancellor and the Foreign Minister too - are doing everything to make sure these sanctions are not necessary. But if Russia isn't ready to make sure the escalation finally ends, it must expect that Europe and Germany will be ready to start the third phase of sanctions." Russia's a key market for Germany - any escalation of the crisis is sure to hit outlook hard. Analyst and investor sentiment already falling for fourth months in a row. Last year, Germany's economy grew just 0.4 percent. While the fresh forecasts are an improvement, it's not the growth of old. BGC's Mike Ingram (SOUNDBITE) (English) BGC MARKET STRATEGIST, MIKE INGRAM, SAYING: "There were signs even before Crimea hoved into view as a market-moving element that economic momentum in Germany had actually pretty much peaked. And I think you are starting to see perhaps some softening of the numbers. But that is not necessarily a bad thing. I actually think it's quite healthy if Germany slows down a bit and allows some of the periphery to catch up." Germany's growth used to be driven by exports. Now though it's domestic demand. A strong labour market, moderate inflation and low interest rates making households more willing to splash the cash A rare thing for a nation of savers.

Germany growing...for now

Tuesday, Apr 15, 2014 - 01:40

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