Germany posts public surplus amid budget debate

BERLIN: Germany on Tuesday announced a smaller but nonetheless substantial budget surplus for the first half of 2019, amid increasing calls for Berlin to spend more to stave off recession.
The positive figure of 45.3 billion euros ($50.3 billion) in public coffers is down from the same period last year, when it reached 51.8 billion euros, with a surplus of 62.4 billion euros for 2018 as a whole, federal statistics office Destatis said.
For the past five years, Europe’s biggest economy has consistently posted public budget surpluses. The latest figure is 2.7 per cent of gross domestic product, suggesting Chancellor Angela Merkel’s government could untie the purse strings and boost sluggish growth.
Destatis also confirmed that Germany’s GDP declined by 0.1 per cent in the second quarter while all signals point to further shrinking in the current quarter, spelling a technical recession.
The German economy, which is highly dependent on exports, is vulnerable to global trading tensions, especially strife between Washington and Beijing, and uncertainty about Britain’s exit from the European Union at the end of October.
In seasonally adjusted figures, German exports fell by 1.3 per cent from the previous quarter, while imports were down by 0.3 per cent, Destatis said.
In annual comparison, exports contracted by 0.8 per cent — the first time that has happened in six years.
With rising fears of a global downturn, Merkel’s government is facing increasing calls, both at home and abroad, to spend more on investments or approve tax cuts to support the economy.
Before the G7 summit in Biarritz, French President Emmanuel Macron had mentioned Germany as among “countries that have the capacity” to stimulate the economy and suggested this was a “profound question” for Merkel to ponder.
Merkel also faces domestic calls to put an end to the dogma of balancing the federal budget, known as the ‘Black Zero’.
But with key regional elections looming this weekend and next month, it would be a gamble to ditch the policy, which is popular with voters. — Reuters