G-20 nation profile: Germany
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Here is an overview of Germany, one of the members of the Group of 20 attending the upcoming economic summit in Pittsburgh.
WHO IS THE LEADER FROM GERMANY ATTENDING THE G-20 SUMMIT IN PITTSBURGH?
Germany will be represented at the summit by Angela Merkel, chair of the center-right Christian Democratic party and chancellor of the country since 2005. Ms. Merkel, 54, leads a "Grand Coalition" between the Christian Democrats and the center-left Social Democratic Party. Ms. Merkel was born in Hamburg but raised in communist-controlled East Germany, where she trained as a scientist and earned a Ph.D. in physics. After the fall of the Berlin Wall and reunification, Ms. Merkel came under the tutelage of Chancellor Helmut Kohl, serving in his Cabinet for eight years. Since her own election four years ago she has consistently ranked as Germany's most popular politician, respected for her analytical rigor and humble demeanor. She is the first woman and the first person from the former East Germany to serve in the country's most powerful office.
WHAT ARE THE CURRENT ECONOMIC CONDITIONS IN GERMANY?
First the good news: Germany is officially no longer in recession. In the second quarter of 2009, the economy experienced positive, if modest, growth of 0.3 percent. A new report also suggests that the country may avoid major job losses because of a government policy that subsidized wages at companies that held on to workers during the downturn.
But independent economic analyses also suggest that full recovery will take a long time yet. There is a lot of ground to make up from the sharp drop in GDP at the end of 2008 and the beginning of 2009. The government's response to the country's troubled banking sector has been especially hesitant, leading to fears that Germany may experience a Japan-style "Lost Decade" of low growth and stagnation. Many companies have already reported trouble accessing lines of credit.
WHAT IS THE GENERAL MAKEUP OF THE GERMAN ECONOMY?
Before the crisis, Germany was the third-largest economy in the world, after the United States and Japan. It was also the world's biggest exporter, ahead of China. Germany is one of the world's leading producers of automobiles, machine tools and chemicals. It is also the largest economy in the European Union. But, even before the crisis, the German economy was not without problems. The country is still coping with the effects of its reunification in 1990. The former West Germany continues to transfer about 5 percent of its GDP over the old border, but the former east still experiences unemployment rates of about 12 percent and has been unable to shake off its economic malaise. In the long term, many economists wonder how long Germany's exports can make up for its relative lack of domestic consumption, a problem exacerbated by an aging population and stagnating wages.
WHAT IS MERKEL HOPING TO GET OUT OF THE G-20 SUMMIT?
Ms. Merkel has already made clear that she wants to focus on financial market regulations, emphasizing the need for the international banking sector to operate with "discipline" under "common values." The emphasis on banking regulation should come as no surprise: Ms. Merkel pushed for stronger regulation at the London G-20 summit in April, and has not hesitated to blame irresponsibility on the part of American banks for the international economic crisis. Ms. Merkel would like to see other countries -- the United States in particular -- sign on to the international standards defined in the "Basel II" agreement, which was passed into German law in 2007.
WHAT ELSE SHOULD WE KNOW ABOUT GERMANY'S CURRENT POLITICAL AND ECONOMIC SITUATION?
The summit will take place two days before a national vote in Germany, in which Ms. Merkel will be up for re-election. She has promised, nonetheless, to attend the summit, a decision in line with her campaign strategy: Until now, Ms. Merkel has been able to project an aura of inevitability around her eventual victory. Indeed, most polls show that her rival, the SPD's Frank-Walter Steinmeier, has little chance of becoming chancellor after the election. The major question that the election will decide is which political coalition Ms. Merkel will manage to forge after the election. Her preferred coalition partner is the business-friendly Free Democrats, with whom she would likely lower income taxes and reduce labor market regulations.
First Published September 8, 2009 12:00 am
