Economic indicators don’t look too favorable for Germany at the moment. Nevertheless, the German country-specific exchange traded fund (ETF) may do better this year, with the government forecasting positive numbers overall.
Germany estimated that its economy contracted a slightly worse-than-expected 5% in 2009, with the economy remaining stagnant in the fourth quarter, reports Marcus Walker for The Wall Street Journal. According to the German federal statistics office, the economy is down because of diminished exports and business investment.
The data, along with other recent European indicators, makes the European Central Bank and the Bank of England more wary about considering a reduction in monetary stimulus. The ECB is expected to keep its key rate at 1%.
The weak GDP numbers might also be a reflection of companies quickly reducing inventory. Additionally, household consumption has also been decreasing. Germany has done little to change its economic strategy toward higher domestic demand. The country’s export-dependence makes its economy highly dependent on foreign demand.
Germany’s employment levels only dropped 0.1% last year from 2008. However, layoffs could increase this year as companies adjust for a lower production capacity.
The German government projects a 1.4% economic expansion for the current year, according to iMarketNews. [Germany’s recovery in sight.]
For more information on Germany, visit our Germany category.
- iShares MSCI Germany Index (NYSEArca:EWG)
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.