During a time of recovery for Germany and its exchange traded fund (ETF),  The German government has approved a stimulus packages to stem the effects of global slowdown.

The stimulus package comes with a $29 billion price tag, which amounts to 2% of Germany’s GDP. It will include tax breaks on car purchases, loans to small- and medium-sized businesses, and money for infrastructure, writes Katrin Bennhold for The New York Times.  But some economists warn that the stimulus is paltry. They claim that it is not enough to significantly help the German economy.

Just weeks ago, Berlin approved an emergency bailout package of $611 billion for German banks, but efforts to balance the budget might be pushed back.

As the German government cuts growth forecasts for the next year to 0.2 % from 1.2% in response to reduced demand for German exports, economists are hoping governments would lower taxes and increase spending on top of interest rate cuts to compensate for a weak private demand.

The iShares MSCI Germany Index Fund (EWG) is down 49.7% year-to-date.

ETF EWG performance chart

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.