FocusEconomics Speaks with Dukascopy Regarding the Greek Crisis
FocusEconomics Economist Teresa Kersting was recently interviewed by online Swiss financial television channel Dukascopy TV, focusing on Germany and its economic outlook in the near future.
The interview began with a discussion on the fall in German factory orders, which were slightly below what was forecast for the month of May. When asked what the significance of the contraction was for German manufacturing Teresa responded that the Factory Order Index is typically volatile and that the modest contraction of 0.2% was not cause for alarm. Strong growth numbers from April coupled with the increase in demand for orders from outside the EU made up for the shrinking numbers from within the EU and actually “painted a rather positive picture for German Manufacturing.”
Teresa was also asked about the situation between Greece and Germany who have been at odds for some time as Germany has taken a rather hard line on Greek debt relief since February of this year. Following the historic “no” vote in Greece on the referendum for further fiscal austerity measures last week, Sigmar Gabriel, Germany’s Federal Minister for Economic Affairs and Energy, was quoted as saying that Greek Prime Minster Tsipras had, “torn down the last bridges on which Greece and Europe could have moved towards a compromise.” According to reports, over 61% of voters in Greece backed new Prime Minster Alexis Tsipras in voting against further austerity measures while only roughly 39% voted “yes” in the referendum vote. The outcome sent shock waves through the Eurozone and much of the rest of the world as many foresaw this as the beginning of the end for Greece as a member of the European Union. After emergency meetings between the parties involved this past weekend, a surprising agreement was struck on an EUR 86 billion bailout that would keep the country in the Eurozone. However, Greece is still on the clock as they must implement the unpopular reforms set out in the agreement within the next three days or risk being expelled from the Eurozone.
Greece’s still possible exit could impact the Eurozone heavily, however, Teresa believes that any economic impact on Germany’s economy directly in the event of a “Grexit” will be limited.
“The direct economic impact on Germany is likely to be limited as the German economy stands on a strong footing and only a small fraction of total German exports are shipped to Greece […] Germany’s Finance Minister Schäuble repeatedly noted that even in the case of a Grexit, Germany would still be able to meet its target of achieving a balanced budget through the next years.”
The entire interview is embedded below. Watch the video interview for more of Teresa’s analysis on Germany and Greece as well as other key indicators that should be looked out for regarding the health of the German economy in the coming days and weeks.
Author: Teresa Kersting, Economist
Date: July 13, 2015
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