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German economy grew strongly in 2010. With a +3.6% increase in the
price-adjusted gross domestic product (
growth was the highest since German reunification in 1990, according to the
federal statistics office, Destatis.
The economic recovery occurred mainly in spring
and summer of 2010. A year earlier, Germany had still experienced the most
serious recession since World War II: The price-adjusted
GDP slumped by 4.7% in 2009.
Destatis said today that what was striking in
2010 was the fact that economic growth was not only based on foreign trade,
but also on domestic demand. Capital formation in machinery and equipment
showed a particularly noticeable increase on the previous year (+9.4%) though,
admittedly, it had also recorded the strongest decline in 2009. Capital
formation in construction showed a lesser increase (+2.8%); however, it had seen
a much lesser decline in the year of the crisis, too. Final consumption
expenditure, too, was up in 2010. In price-adjusted terms, final consumption
expenditure of households increased 0.5%, while government final consumption
expenditure rose even by 2.2%.
As in many years before the crisis, foreign trade
was a major driving force for economic growth in Germany in 2010. After negative
growth rates had been recorded in 2008 and 2009, foreign trade in 2010 was again
a pillar of economic development. Exports were up a price-adjusted 14.2%, while
imports increased less strongly (+13.0%). Hence the balance of exports and
imports (net exports) made a positive contribution of 1.1 percentage points to
GDP growth in 2010.
The economic performance in 2010 was
achieved on an annual average by about 40.5m persons in employment whose place
of employment was in Germany. That was an increase of 212,000 persons or 0.5% on
a year earlier - - the number of persons in employment
reached a new all-time high.
According to provisional calculations, general
government net borrowing amounted to €88.6bn in 2010. Related to
GDP at current prices, this
leads to a deficit ratio of 3.5%. After a slightly positive balance in 2007
(+0.3%) and 2008 (+0.1%) and a deficit ratio of 3.0% in 2009, the reference
value of 3% of the
down in the European Union's Maastricht Treaty was exceeded in 2010 for the
first time in five years.
Economic View: Beefing up of the EFSF becoming more likely; Goodbody
chief economist, Dermot O’Leary, comments -- "It shouldn’t come as any great surprise given the continuing stress in European
sovereign bond markets that European policymakers are, once again, being pushed
into a response. Responding to problems when they present themselves, rather
than getting ahead of them, has been a key theme of the current crisis in
Portugal’s auction (2014 and 2020 paper) this morning will be a key
barometer of the current market mood, but we already know that the price that
Portugal will pay for borrowing will be unsustainable for that country in the
medium-term. The current financial support mechanisms can deal with Portugal,
but, beyond that country, it is becoming clear that the mechanisms need to be
expanded. Up to now, European policymakers have denied this, but Olli Rehn, the
EU Commissioner for economic and monetary affairs, makes an important
contribution to the debate in this morning’s Financial Times.
He backs the
widening of the scope of its activity. The FT suggests that one such way of
widening the scope of the EFSF would be to give it the ability to buy up bonds
of euro-zone sovereigns. This is something that the ECB would undoubtedly
support, given its reticence in getting involved in what it believes to be
fiscal policy matters by buying up government bonds since the Greek crisis last
May. Some officials are also backing the EFSF to issue short-term loans to
countries that are solvent, but are experiencing liquidity problems.
of the auctions today and tomorrow will matter and provide an input into the
discussions by EU finance ministers at their first meeting next week. They need
to act quickly and comprehensively to shore up confidence before it’s too late."
Brian Devine, chief economist at NCB Stockbrokers joined CNBC's Anna Edwards in Dublin on Tuesday, to discuss Ireland's economic recovery following the bailout it received in 2010:
Portugal in the spotlight: Davy economist, Conall Mac Coille,
comments - - "Today markets will focus on Portugal's efforts to
raise €1.25bn in a bond issue. Portugal has a heavy burden of debt
rescheduling this year with around €20bn of bonds in total maturing
in 2011. Hence, Portuguese bond yields have risen sharply over the
past year. In recent days the ten-year bond rose to above 7%, a
similar level to the yields Irish and Greek bonds reached before
their subsequent bailouts.
Yesterday, the ten-year yield fell below 7% following bond
purchases by the ECB and also news that Japan was joining China in
purchasing euro-area bonds to relieve the European debt crisis.
Nevertheless, the outcome of today's bond auction by Portugal
will be keenly watched. If Portuguese bond yields continue to rise,
markets will interpret that as indicating that a bailout from the
EU/IMF is more likely. Denials by officials that France and Germany
have put pressure on Portugal to accept help have been less than
Although the current IMF/EU fund could easily cope with the
funding needs of the Portuguese sovereign (the likely package would
be smaller than that for Ireland or Greece), such a bailout would
inevitably turn the market's focus to other European countries. The
most likely candidate on the list of indebted European economies is
Spain – a far more important economy in terms of size for the euro
area. For now though, European policy makers appear to be content
with a piecemeal reactive response as the crises emerge. So a
bailout for Portugal is more likely to reinforce investors' concerns
with respect to euro-area sovereign debt."
The Spanish mortgage situation doesn't represent a threat for the country's financial sector, Matias Rodriguez Inciarte, vice-chairman of Santander, told CNBC. Spanish companies are well diversified internationally, he added:
On Tuesday, the Dow Jones Industrial Average rose
34.43 points, or 0.30%, to 11671.88.
The Nasdaq Composite rose 9.03, or 0.33%, to 2716.83. The Standard & Poor's 500
index gained 4.73, or 0.37%, to 1274.48.
MSCI Asia Pacific rose 0.9% Wednesday.
Nikkei 225 inched up 0.02%; China's Shanghai Composite rose 0.62%; Australia's S&P/ASX
200 Index added 0.29% and India's Sensex added 1.69%.
closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
On Friday July16th, the BDI rose 20
points or 1.12% to 1,700 to break the 35-session losing streak;
The BDI fell 15 points or 1% to 1,480, on
Tuesday this week - - a fall of more than 30% since early December and the
lowest since Apr 2009. The plunge has been triggered by an oversupply of ships.