Ger­man spend­ing will do lit­tle for global growth

The Myanmar Times - - International Business -

A PUB­LIC stim­u­lus pro­gram in Ger­many would con­trib­ute lit­tle to lift­ing global growth, the Bun­des­bank said, shrug­ging off calls from euro­zone part­ners for Ber­lin to in­crease its spend­ing.

“It ap­pears that a pro­gram of pub­lic spend­ing in Ger­many would not be the most ap­pro­pri­ate tool to help give a strong stim­u­lus to the in­ter­na­tional econ­omy,” the cen­tral bank said fol­low­ing a study into the is­sue.

In­creased pub­lic spend­ing would boost Ger­man do­mes­tic de­mand, and thereby trade with “some small and medium-size economies in the sur­round­ings of Ger­many and in cen­tral Europe”.

But the ef­fect would be “weak” for the euro­zone’s big­gest economies like France, Italy and Spain, said the Bun­des­bank, adding that it would also have lit­tle im­pact on Por­tu­gal and Greece.

The bank grounded its ar­gu­ments in a study that sim­u­lated an in­crease in Ger­man pub­lic in­vest­ments by up to 1 per­cent of gross do­mes­tic prod­uct over two years. –

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