MEXICO CITY (MNI) – The German economy is basically in good shape
but the sovereign debt crisis will determine the robustness of growth in
the Eurozone’s largest economy and elsewhere, European Central Bank
Governing Council member Jens Weidmann said late Saturday.
Weidmann, who heads the German Bundesbank, told journalists in a
briefing on the margins of the meeting of G-20 financial ministers and
central bank governors that the current global economic environment is
one in which a weak phase seems to be giving way to signs of
improvement.
“Inasmuch, there are chances that the relatively pessimistic
prognoses of the IMF are exceeded,” he said.
In Germany, “prospects have brightened recently,” he said, noting
positive developments such as the continued favorable trend on the labor
market as well as “normal” capacity utilization.
“The German economy is in good condition fundamentally,” he said.
“However, business-cycle prospects not just in Germany hinge also on the
development of the debt crisis.”
Weidmann reiterated the assertion of his speech at Friday’s IIF
conference here, saying that in contrast to the views of some, “Germany
already makes a substantial contribution” to stability, a fact he
complained is “sometimes swept under the carpet.”
Germany does this, he argued, not merely by shouldering its proper
share of the financial burden of common measures, “but also in its role
as an anchor of stability” and by championing rules for a viable
currency union.
He again took to task those who would urge that “Germany should use
its fiscal room to maneuver to support the business cycle” elsewhere in
Europe.
Such demands overlook the fact that “the positive effects on the
periphery of the Eurozone are relatively slight,” especially compared to
the cost of “shattering confidence in the German consolidation course.”
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
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