German Chancellor Angela Merkel warned Germans that the economy, Europe’s biggest, would experience a harder time this year than last year and cautioned too that the eurozone debt crisis was far from over.
In her annual New Year address published yesterday, Merkel said: “In fact, the economic environment next year will not be easier, but more difficult,” adding: “The crisis is a long way from being beaten.”
Although top exporter Germany has managed to hold up to the crisis fairly well, growth has slowed since the beginning of last year.
After expanding by 0.5 percent in the first quarter of last year, GDP grew by just 0.3 percent in the second quarter and a mere 0.2 percent in the third quarter.
And in October, the government slashed its forecast for economic output next year to 1 percent, compared to 1.6 percent previously anticipated.
The country’s gloomy central bank has said Germany may even flirt briefly with recession early this year.
The Bundesbank also forecast that Germany would only grow by a meager 0.4 percent this year.
Nevertheless, “it has been possible this year to have the lowest unemployment and the highest level of employment since the reunification” in 1990, Merkel said.
And a slowdown this year “should not leave us discouraged but should spur us on,” said the chancellor, according to the text of her speech released in advance by her office.
Turning to the eurozone’s efforts to tackle its three-year debt crisis, she said that “the reforms that we have decided are beginning to work. However, we still need more patience. The crisis is a long way from being overcome.”
She appeared more pessimistic than other eurozone leaders such as French President Francois Hollande or even her own finance minister, Wolfgang Schaeuble, both of whom have declared the worst of the crisis over.
In an interview with mass circulation Bild last week, Schaeuble said: “I think the worst is behind us,” citing positive developments in Greece and France.
Hollande has repeatedly said the eurozone crisis, which has at times threatened the very existence of the 17-country currency union, was past.
Merkel also called for better supervision of the financial markets, stressing: “The world has still not sufficiently learnt the lessons of the devastating financial crisis of 2008.”
“Never again should such a lack of responsibility assert itself as before. In the social market economy, the state is the guardian of order and people have to be able to have confidence in that,” the chancellor said.