Mar 9, 2014
Clouds of Recession Gather Over Northern Europe
Posted on Apr 26, 2013
A gloomy forecast for the sales of a German automaker portends the possible spread of Southern Europe’s economic crisis to other parts of the continent—and the world.
“The E.U. has made Europe a much more cohesive economy, which is good when things are going up,” said Carl B. Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. “But when things are going down the multiplier is very strong. An outgoing tide lowers all ships.”
The problem comes when demand in global markets for Germany’s export products declines due to recession in those countries. Perhaps the spread of the crisis will tempt leaders in areas as yet unaffected by the crisis to abandon the austerity policies that are maintaining, deepening and spreading the European recession.
In Germany there are few overt signs of crisis. Unemployment stands at 5.4 percent, compared with an average of 10.9 percent across Europe. Together, Germany and the other 26 nations of the European Union represent the world’s second-largest economy. As a bloc it is the single largest trading partner with the United States. Further delay in Europe’s recovery, caused by a German recession, would seriously inhibit growth in the United States, Asia and Latin America.
—Posted by Alexander Reed Kelly.
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