Another year and austerity still doesn’t work!

So, Germany’s GDP has shrunk in the fourth quarter and growth for the entire year was weak (http://www.spiegel.de/international/business/german-shows-budget-surplus-in-2012-despite-slow-growth-a-877563.html) – weaker than in Japan, China or the US, countries that did not go (full) austerity. This doesn’t come as a surprise to those that understood that the “debt brake” and drive towards a budget surplus would continue to undermine domestic demand while austerity all over the EMU would undermine exports. In fact, the headline of the article should be the other way around: “Germany experiences some growth despite budget surplus”. Drivers of this growth were those profligate non-austerity countries that still imported German goods.
The numbers *do* seem to be a surprise to the macroeconomic organizations that only nine months ago predicted higher growth (http://www.spiegel.de/international/germany/think-tanks-predict-0-9-percent-growth-for-germany-in-2012-a-828486.html). In fact, most of them still got it quite wrong only five months ago (http://www.spiegel.de/wirtschaft/unternehmen/ezb-senkt-den-leitzins-welche-folgen-das-fuer-die-konjunktur-hat-a-842628.html). And now those same organization try to predict GDP developments for 2013, and are predicting, predictably, that further austerity will lead to growth and not, as the last 5 years showed, to shrinkage.

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This entry was posted in austerity, belief systems, economic policy, eurocrisis, media, neo-liberalism. Bookmark the permalink.

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