The German economy could enter a recession in the third quarter, the Bundesbank warned Monday, as the debate on government measures to support the economy swelled in Berlin.
“The economy could contract again slightly” this summer, Germany’s central bank said in its monthly report, following a 0.1-per cent decline in gross domestic product (GDP) in the second quarter.
“According to data currently available, industrial production is expected to shrink markedly in the current quarter as well.”
Having seen a decline in trade against the backdrop of the US-China trade war, two of its main customers, Europe’s biggest economy will enter what it technically defines as a recession should GDP shrink further.
Alarmist signals are reviving the political debate between those who support the German government’s dogma of balanced budgets and those seeking more flexibility in order to revive the economy.
Germany can afford it on paper after five consecutive years of budget surpluses and interest rates for long-term loans that are extremely attractive to the federal government.
As US-China tensions intensify, economists have urged Berlin to fork out cash to avoid a recession, but Chancellor Angela Merkel’s government has previously said things were not yet bad enough to warrant loosening the purse strings.
Citing anonymous sources, Der Spiegel news magazine said Friday that the government “had no intention of continuing to set aside money in the event of a recession”.
That would mean abandoning the so-called “black zero” doctrine committing the German state to a balanced budget.
On Sunday, German Finance Minister Olaf Scholz hinted at a potential intervention, stating that Germany could “fully face up to” a new economic crisis.
“It is sometimes important, when things change completely, for example, for us to have enough strength to react,” he said during an open house day at government offices.
“If we have debt in Germany that is less than 60 per cent of our GDP, that is the strength we need to stand up to a crisis,” he added.
Scholz pointed to the estimated 50 billion euros ($55 billion) that the 2008-09 financial crisis had cost the German government.
“We have to be able to muster that and we can muster that –- that’s the good news.”
In particular, several Social Democrats, junior partners in Merkel’s coalition government, want Germany to draw on its reserves to finance a plan to combat global warming or infrastructure works.
Flexibility instruments could enable Berlin to draw on its large budget surplus of 1.7 per cent of its GDP as early as September.
Merkel’s conservatives have so far resisted and abandoning the popular balanced budget stance seems unlikely with major regional elections looming in September and October.
Top diplomats from Ukraine and Russia met their German and French counterparts in Berlin Monday seeking to revive long-stalled efforts to end the smouldering civil war in eastern Ukraine.
The Ukraine conflict, half-forgotten by the West amid other crises and its own divisions, has claimed over 10,000 lives and still sees daily clashes between pro-Russian and Ukrainian forces.
After over a year on the back burner as France, Germany and Russia have been caught up in their own elections, all three have now turned their focus back on Ukraine which goes to the polls next year.
At the start of the talks — the first between the quartet in 16 months — German Foreign Minister Heiko Maas said they were hoping to reach “a ceasefire that deserves its name”.
Key aims include the withdrawal of heavy weapons along the frontline, the launch of de-mining operations, and generally “breathing new life” into the 2015 Minsk agreement that sought to end the fighting.
Maas said another new topic would be the eventual deployment of a UN peace-keeping mission in eastern Ukraine, but acknowledged that ideas on the issue “are far apart”.
While Moscow favours blue-helmet troops only along the frontline, Kiev would want them to also police the Ukraine-Russian border to prevent soldiers and weapons from crossing.
The UN Security Council last week condemned “continuous violations of the ceasefire” and “the tragic humanitarian situation” on the frontline.
“I have no illusions — the new start will be difficult,” Maas told Bild daily.
On Friday, his French counterpart Jean-Yves Le Drian warned that, given the daily death toll, “the credibility of the current peace process is at stake”.
– Putin-Poroshenko phone call –
The Berlin meeting is an attempt to restore dialogue between the two sides, even as they blame each other for the ongoing conflict.
In a rare phone call Saturday to prepare for the meeting, Russian President Vladimir Putin and Ukraine’s Petro Poroshenko discussed an “exchange of people being held” by both sides.
But given the deepening distrust between the West and Russia, hopes of a diplomatic breakthrough are low.
After a popular Ukrainian uprising ousted a Kremlin-backed president in Kiev in 2014, Russia moved to annex the Crimea peninsula, backing insurgents in the former Soviet state.
Brussels responded to the territorial grab with a series of asset freezes and travel bans as well as stinging economic sanctions, with Moscow retaliating in kind.
Since then, the US and European powers have accused Moscow of using hackers and propaganda to sow discord, meddle in elections and back eurosceptics and rightwing populists, as well as ramping up military posturing to threaten eastern European states.
And in 2015, Russia entered into Syria’s brutal civil war, defying the West by unleashing a bombing campaign in support of Bashar al-Assad.
Relations hit a new low in March when many western states expelled Russian diplomats over Moscow’s alleged involvement in the poisoning of former double agent Sergei Skripal and his daughter Yulia in Britain.
– Seeking EU divisions? –
Putin, who was re-elected to a fourth term in March, has denied all the charges and argued forcefully that hostile NATO powers are seeking to demonise and weaken Russia.
Moscow also accused Kiev of spreading “bizarre” fake news after Ukraine’s secret service last month staged the murder of Russian journalist Arkady Babchenko, claiming it did so to foil a Russian plot on his life.
Heightening tensions, Putin on Thursday warned that any military “provocations” during World Cup football tournament which Russia is hosting, would have “very severe consequences for Ukraine as a state”.
Russia’s main goal is the lifting of damaging economic sanctions, a push aided by the rise of sympathetic populist parties in the EU, most recently in Italy.
On a visit last week to conservative Austrian Chancellor Sebastian Kurz, whose far-right junior coalition partners back Russia’s claim of sovereignty over Crimea, Putin denied any wish to “divide” the EU bloc.
France and Germany agree that any sanctions relief for Russia must be conditional on advances in the Ukraine peace process.
Barcelona defender, Javier Mascherano, has cautioned his teammates against Juventus pair, Gonzalo Higuain and Paulo Dybala, ahead of Tuesday night’s UEFA Champions League quarter-final first leg tie.
Juventus will meet Barcelona for the first time since the 2015 Champions League final, when an early Ivan Rakitic strike left Massimiliano Allegri’s men with a mountain to climb before they succumbed 3-1 in Berlin.
Barcelona will be without Sergio Busquets due to suspension, meaning Mascherano could be given a rare outing in the midfield holding role.
Neymar, as well as Rakitic and Gerard Pique, who returned to the team following a suspension against Malaga, are all one booking away from a suspension that would rule them out of the return leg.
Former president of the International Federation of Association Football (FIFA), Joao Havelange has died at the age of 100.
According to reports in Brazil, Havelange, who competed as an Olympic swimmer for Brazil at Berlin in 1936 and was a member of their 1952 water polo team in Helsinki, died in Rio de Janeiro, Brazil.
The Brazilian served as the seventh president of FIFA from 1974 and 1998 before Sepp Blatter took over.
João Havelange served as a member of the International Olympic Committee (IOC) from 1963 to 2011, him being the longest-serving active member upon his resignation.
Expressing his sympathies, FIFA President, Gianni Infantino, said: “During his 24 years as FIFA President football became truly global, reaching new territories and bringing the game to all corners of the world. Something the whole football community should be grateful for. I extend my condolences to his family”.
Joao Havelange was born in Rio de Janeiro on May 8, 1916 to Belgian immigrants, Jean-Marie Faustin Godefroid.
Though he trained as a lawyer, Havelange continued to pursue a career in the world of sport, becoming the head of the Brazilian delegation at the Melbourne Olympics in 1956 and the honorary president of Fluminense Football Club.
In 1958, at the age of 42, he was appointed chairman of the Brazilian Sports Association (CBD), which later became the Brazilian Football Association (CBF).
Voted on to the International Olympic Committee in 1963, Havelange was elected President of FIFA on 11 June 1974.
European countries have announced plans to accommodate as many as 160,000 migrants seeking asylum.
That plan of action has however been criticised by Germany, who claimed they can do more.
Germany’s Vice-Chancellor, Sigmar Gabriel, said thousands are estimated to arrive in Europe this year and when put together, the number of people expected in 2015, and 2016, will reach as high as 900,000.
On Wednesday, the European Commission President, Jean-Claude Juncker, announced plans to distribute 120,000 refugees from Greece, Italy and Hungary among member states, via binding quotas.
He described the plan as ‘a first step, if one wants to be polite.’
Thousands of migrants have been pouring in mainly from Syria, where a civil war has been ongoing for almost four years. And from Libya, which has been political unstable, since the death of Muammar Gaddafi, in 2011.
Earlier today, German Chancellor, Angela Merkel, visited a home for refugees in Berlin.
Later, she said she hoped newcomers would integrate with the help of their children learning German in school.
The official match ball for the UEFA Champions League knockout stages and final has been unveiled in Berlin.
The design has been inspired by the dynamic, young and hip scene of Berlin.
The top star includes one of the most recognisable symbols of the city: the Brandenburg Gate set against the legendary Olympiastadion, setting for the 2015 UEFA Champions League final on Saturday, June 6.
The now familiar surrounding stars on the ball each have a bold and colourful design, including another symbol inextricably linked with Berlin: the bear.
The vibrant mix of colour is also typical of the expressive, artistic and free spirited German capital city.
As with all official UEFA Champions League match balls, the Adidas Finale Berlin features an outer coating texture designed to provide optimal grip at the point of impact.
The thermally-bonded star panel design, based on the design of the UEFA Champions League logo, provides a seamless surface and first-class performance.
The Adidas Finale Berlin ball will be used for all UEFA Champions League matches from now on this season.