Econintersect: Riding a wave of increased tax revenues from a growing economy, Germany will have a budget deficit for 2011 approximately 1% of GDP. This is a dramatic improvement from the deficit in 2010 which was 4.3% of GDP. The Maastricht_Treaty requirement is that deficits cannot exceed 3% of GDP. Germany had violated that limit as a result of the global Great Recession 2007-09. In addition to the miss in 2011, the deficit was 3.2% in 2009.
The German economy grew at a 3% rate in 2011, despite a fourth quarter stall to a contraction of 0.3%. Recent projections reported by GEI News have the Eurozone experiencing a slight contraction for the year 2012, about 0.3%. However, Der Spiegel reports that the outlook is improving for Germany:
Germany, however, is expected to buck the trend along with France. Growth in the two countries is to be 0.6 percent and 0.4 percent respectively, according to Commission forecasts. “The outlook for the German economy improved perceptibly,” said the German central bank in a statement released earlier this week.
And despite the drop in demand for German exports in the euro zone, forward looking indicators are strong. A key business sentiment survey performed by the Munich-based Ifo Institute rose to its highest level in seven months in February.
Sources:
- German budget deficit down to 1 percent in 2011 after 2 years above eurozone limit (Washington Post, 24 February 2012)
- German Budget Deficit Plunges to 1 Percent of GDP (Der Spiegel, 24 February 2012)
- Views Vary on European Economic Outlook (GEI News, 24 February 2012)
The Der Spiegel article was found on the Econintersect Europe newspaper page.
