Germany ignores Soros as exports boom at consumers’ expense
Bloomberg
Posted: Thursday, Aug 19, 2010 at 1958 hrs IST
Updated: Thursday, Aug 19, 2010 at 0055 hrs IST
: Germany may have become too competitive for its own good. With exports driving the fastest economic growth since reunification, consumers are failing to respond in kind as companies from Siemens AG to Daimler AG hold fast to the wage restraint that’s given them an international edge. The result: Europe’s largest economy, four times more reliant on exports than the US, is firing on only one cylinder.
That’s unlikely to change as Germany spearheads a push for European fiscal prudence and ignores calls from investors and the Obama administration to do more to help rebalance the global economy by reviving domestic demand. While Chancellor Angela Merkel’s plan to cut 80 billion euros of spending helps make government bonds attractive to Pacific Investment Management, retail stocks may suffer, and the country’s dependence on exports leaves it vulnerable to a global slowdown. “Germany has got to work on its domestic demand,” said Andrew Bosomworth, Munich-based head of portfolio management at Pimco, which oversees the world’s largest MF. “Not everybody can export. Somebody has to import.”
French FM Christine Lagarde, the US Treasury and billionaire George Soros have already urged Germany to do more to smooth out trade flows they say are still lopsided and pose an obstacle to recovery.
Bloomberg
Posted: Thursday, Aug 19, 2010 at 1958 hrs IST
Updated: Thursday, Aug 19, 2010 at 0055 hrs IST
: Germany may have become too competitive for its own good. With exports driving the fastest economic growth since reunification, consumers are failing to respond in kind as companies from Siemens AG to Daimler AG hold fast to the wage restraint that’s given them an international edge. The result: Europe’s largest economy, four times more reliant on exports than the US, is firing on only one cylinder.
That’s unlikely to change as Germany spearheads a push for European fiscal prudence and ignores calls from investors and the Obama administration to do more to help rebalance the global economy by reviving domestic demand. While Chancellor Angela Merkel’s plan to cut 80 billion euros of spending helps make government bonds attractive to Pacific Investment Management, retail stocks may suffer, and the country’s dependence on exports leaves it vulnerable to a global slowdown. “Germany has got to work on its domestic demand,” said Andrew Bosomworth, Munich-based head of portfolio management at Pimco, which oversees the world’s largest MF. “Not everybody can export. Somebody has to import.”
French FM Christine Lagarde, the US Treasury and billionaire George Soros have already urged Germany to do more to smooth out trade flows they say are still lopsided and pose an obstacle to recovery.