The recession in Germany is slowly but surely coming to an end, if the signs are right. The German economy, along with its related exchange traded fund (ETF), will continue to be export-oriented and a turnaround here could go a long way toward reviving it.
German exports rose 0.3% in May from the month before while imports dropped 2.1%, increasing Germany’s trade surplus to $14.4 billion, a level last touched upon in December of 2008, according to BBC News. Exports, however, were still 24.5% lower year-over-year. Germany is one of the world’s largest exporters.
The economy minister Karl-Theodor zu Guttenberg says Germany will not stray from its current export business model. Industrial output rose by 3.7% in May compared to April, factory orders have improved by 4.4% in May and confidence in companies are on the rise.
Chancellor Angela Merkel and her coalition government have spent $118 billion in economic stimulus but still project a 6% contraction for the year, reports Simone Meier For Bloomberg.
German carmakers are increasing output to capitalize on a new government incentive to trade in old vehicles and to bolster inventory for export demand.
Household spending may decrease and hinder a recovery as unemployment continues to rise. Joblessness increased 8.3% in June and the Bundesbank expects it to increase to 10.5% next year.
- iShares MSCI Germany Index (EWG): down 8.4% year-to-date; up 5.5% in the last three months
For more information on Germany, visit our Germany category.
Max Chen contributed to this article.
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.