Sustained strength in the German economy will put pressure on Berlin to provide more financial aid to indebted eurozone partners, analysts say.
The biggest European economy grew by 1.5 percent in the first three months of the year from the previous quarter, an official estimate showed last week, a pace that surprised financial markets.
The other eurozone heavyweight, France, reported a solid advance of 1 percent, while the economy in Spain, considered a crucial buffer to the bloc’s debt crisis, advanced by a more modest 0.3 percent.
Germany was boosted by stronger domestic demand and a catch-up effect after the weak end to last year, and retained its role as Europe’s economic locomotive.
German Vice Chancellor Philipp Roesler welcomed the news, but it also means Berlin would find it harder to refuse aid to partners like Greece and Portugal as they struggle with persistent debt crises.
“This will add to the pressure on Germany to agree to new support loans for Greece, which will probably be unable to return to the capital market in early 2012 as planned,” Commerzbank chief economist Joerg Kraemer said.
Greece already benefits from a financial aid package worth 110 billion euros (US$155 billion) from the EU and IMF, but markets estimate it will need up to 60 billion euros in additional aid.
With Germany seemingly set for economic growth of about 3 percent this year, which would generate higher tax receipts and curb unemployment, opposing aid for its partners could be hard to justify.
Another economist underscored that the EU rescue packages had helped prevent Germany from suffering a “double dip” recession following its worst post-war slump in 2008 to 2009.
“Safety nets offered to Greece and other small peripheral countries have shielded the core European upswing from the vicious financial crisis at the fringes of Europe,” Berenberg Bank’s senior economist Holger Schmieding said.
“Germany must continue to do its bit to contain the eurozone debt crisis,” he said, if only to protect its own financial sector, which holds a lot of the debt issued by Greece and other peripheral countries.
Falling German unemployment should help German officials make the case to a public that is generally opposed to additional financial aid for southern countries, where retirement ages can be much lower, for example.
“The message is taken in more easily when one is working and has rising revenues,” Barclays Capital economist Frank Engels said.
So far, however, German politicians have been loath to make the case for more aid to a public and parliament that is in some cases quite hostile to the idea.
German Finance Minister Wolfgang Schaeuble, from the conservative Christian Democratic Union (CDU), began the task last week by telling lawmakers that Greece would have to accept clear conditions in exchange for fresh aid.
“Among German politicians, no one really wants to hear about more help” after already approving aid for Greece, Ireland and Portugal, Engels said.
“‘Rescue’ is a nice word, but Germans cannot hear it any more,” the center-left weekly Die Zeit wrote in an editorial.
Among members of the economically liberal Free Democratic Party, the CDU’s junior coalition partners, more than a dozen MPs have refused to consider more aid and also oppose a mooted permanent rescue mechanism for the eurozone.
German parliamentary approval for the European Stability Mechanism, which would take effect in mid-2013, is scheduled for a vote later this year, and if that opposition spreads among CDU lawmakers, German Chancellor Angela Merkel could turn the issue into a vote of confidence, Engels said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last