Germany’s economy continues to motor ahead even while much of the rest of the Eurozone struggles to show any growth at all.
Think that might explain a bit of the anger and resentment directed by some of its neighbors at Germany’s hard-nosed position on enlarging the euro debt rescue fund?
German GDP grew by 0.7% in the third quarter, data released in November show. Forecasts by Standard & Poor’s project that the German economy will grow by 3.5% in 2010.
Contrast that to the situation in Spain, a country that many fear will be the next euro country to require a rescue. According to the European Commission at the end of November, the Spanish economy will contract in 2010, and then grow by just 0.75% in 2011 and by 1.75% in 2012.
Standard & Poor’s, on the other hand, sees a 2% increase in household spending in 2011, up from just 0.5% growth in 2010, driving the Germany economy to 2.4% growth in 2011 and 2.1% growth in 2012.
Even though the German economy is projected to slow, it will still be growing faster than the Spanish economy by 2012.
The composition of that growth is projected to change, however, S&P projects. Growth in 2010 has been driven by increases in German exports—certainly a euro debt crisis that produced a weaker euro and made German good cheaper to some customers didn’t hurt. In 2011 and beyond consumer spending and business investment will make up a bigger component of growth. Standard & Poor’s is projecting that business investment will growth at 10.5% in 2011, up from 2010 in 2010.
If the euro stays depressed well into 2011, however, that could add to the strength of German exports and delay S&P’s projected rebalancing of German economic growth.