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Merkel may need more than a strong economy

Monday, November 21, 2016 - 01:40

Germany's economy slows during the third quarter after strong growth in the first six months of the year. It comes as Angela Merkel faces perhaps the biggest test of her career, as she seeks a fourth term in office. Sonia Legg reports.

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A slowdown in Germany's economy wasn't enough to knock Angela Merkel off the front pages. Firstly, the finance ministry's 0.2 percent figure for the third quarter was expected - coming after two quarters of strong growth. And secondly the economy is still on track for 1.8 percent growth in 2016 - the strongest expansion rate in half a decade. Private consumption and state spending were the main drivers and the labour market remained solid. That'll be welcome news for Merkel, although she'll have plenty of other challenges as she seeks a fourth term in office. (SOUNDBITE) (English) JANE FOLEY, SENIOR FX STRATEGIST, RABOBANK, SAYING: "Latest German opinion polls suggest 55 percent of Germans would like to see Merkel again as the German Chancellor - that said the reason the opinion polls went down was becauSe of her stance on immigration and there is talk now that she may have to move her stance a little bit to the right." Merkel's promising more state spending on infrastructure in 2017 - without any new borrowing. Germany already has a budget surplus and is under pressure to do more to boost growth in the rest of the euro zone. Many also see her as the region's rock. (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Merkel is seen as the person who can bring stability to an unstable Europe. But it's a mammoth task, the danger of populist election victories is very high. And the ECB has an even more important role, it must placate voters in many countries by financing social gifts." The ECB's current QE programme is due to end in March. And most expect an extension - with the announcement possibly coming as early as next month.

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Merkel may need more than a strong economy

Monday, November 21, 2016 - 01:40