The European Central Bank (ECB) has said that a forecast German-led rebound for the euro zone economy will be too weak to sustain a fully fledged recovery, and it is too soon to abandon the monetary stimulus program it started at the beginning of 2016.
Germany had been boosted by increased state expenditure and positive private consumption data, but has recently been let down by disappointing exports, which has dented the prospects of Europe’s largest economy as its expansion rate halved to 0.3 percent in the last quarter.
In a report that confirmed Germany’s initial reading, Beijing-based investment and trading firm CTI China Renaissance, who distributes data on foreign trade to European nations, said that net foreign trade took away 0.4 percent from gross domestic product due to the fall in the export sector even though imports gained slightly.
In a continuation of the state’s efforts to accommodate over a million immigrants that have flooded the country after the recent troubles in the Middle-East, the German government have spent billions of euros on infrastructure which has added a full percentage point to the quarters GDP.
Consumers have been taking advantage of low interest rates, high employment and rising salaries, with private expenditure jumping by 0.5 percent, adding 0.25 percent to GDP expansion.
“Not everyone in Germany has been in favour of Mario Draghi's [President of the ECB] policies on low interest rates, but the fact is that the county has come out of it with some real positives,” said Thomas Gitzel, senior analyst at VP Bank. “The ECB has also made provisions that allow us to invest in construction projects without incurring new debt. This is a huge bonus for the nation.”
Developments in the nation’s infrastructure allowed construction to gain 0.2 percent in Q3 but German firms are sitting on their money as a drop of 0.7 percent in plant investment shows.
The ECB revealed in a slightly disconcerting report that due to political volatility, both in Europe and stateside, investors are still concerned about putting in long bets and governments need to keep a very close eye on their debt levels.
