German growth to slow due to rising protectionism
Last Updated: 2018-09-26 09:56 | Xinhua
 Save  Print   E-mail

German economic growth is set to cool as a consequence of the global trade conflicts sparked by the "America First" doctrine of U.S. President Donald Trump, the Federation of German Industries (BDI) warned on Tuesday.

"Germany must prepare for a weakening of economic momentum. We must take preparations now," BDI president Dieter Kempf told press in Berlin. "The boom period is over, (and) investment is flattening."

In light of anticipated headwinds faced by companies from new trade barriers, the prominent German industry lobby lowered its forecast for gross domestic product (GDP) expansion in 2018 from 2.25 percent to 2.0 percent.

The BDI now expects goods exports to only grow by 3.5 percent rather than 5.0 percent in real terms during the same period.

"German exporting strength and the unusually large exporting share (of total goods produced, note) of around 50 percent for such a large country are increasingly under threat. Almost every protectionist measure poses risks to German companies, even if it is taken by the United States against China," Kempf said.

While the protectionist policies adopted by Trump were ultimately beyond the control of German legislators, the BDI president also criticized the federal government in Berlin for failing to tackle home-grown economic problems.

"The German industrial sector is waiting patiently for economic policies from the federal government, especially with regards to taxation, digitalization and energy," Kempf complained.

Kempf expressed concern that the "grand coalition", formed by German Chancellor Angela Merkel's CDU/CSU bloc and German Social Democrats (SPD) had become too absorbed in cabinet infighting to take the necessary steps to shore up longer-term growth.

"A government which is permanently engaged in monologues with itself produces stagnation. We need a faster pace in politics."

The BDI hereby highlighted the policy area of taxation where it accused Berlin of "failing to render support" to domestic companies.

The industrial lobby argued that Germany was turning from a high to a highest-taxation country, whereas governments in the United States, United Kingdom and France were attempting to lower the fiscal burden shouldered by their citizens.

Aside from taxation, digitalization in Germany, and the widespread provision of high-speed internet in particular, was identified as another field where more resolute action was required from the federal government.

Kempf further cautioned that even issues that were seemingly unrelated to economic policy, such as an uptick in racist violence witnessed recently in Germany, could derail growth and harm future prospects.

He emphasized that "investments from foreign companies and the integration of skilled laborers from other countries make a significant contribution to German prosperity and the availability of jobs."

Kempf claimed that a supposedly patriotic nationalism which mobilized against immigration and free trade was misguided because it constituted a danger for the business model of industrial companies which was based on openness. "There can be no place for racist hatred in our society," he said.

Share to 
Related Articles:
Most Popular
Chinese | BIG5 | Deutsch
About | About the Economic Daily | Contact us
Copyright 2003-2015 China Economic Net. All right reserved