There is no crisis, we expect growth in 2020, says Germany’s Altmaier

"It is true that the export-oriented German industry is in an economic downturn phase due to the emerging trade conflicts and a 'cooling' global economy. But we are not in a crisis!" Altmaier said in an interview with EURACTIV Croatia. EPA-EFE/ADAM BERRY [EPA-EFE/ADAM BERRY]

In an interview with EURACTIV Croatia, German Federal Economy Minister Peter Altmaier spoke about the forthcoming EU presidencies of Croatia and Germany, the controversial zero growth (‘Schwarze Null’), and the cooperation with the Western Balkan states.

Peter Altmaier (CDU) is the federal Minister of economics and energy in Chancellor Angela Merkel’s cabinet.  He sent written replies to EURACTIV Croatia’s editor-in-chief Željko Trkanjec, ahead of his trip to Croatia, Serbia and Montenegro on 20-22 October.

What will be the universal themes of the forthcoming EU presidencies of Croatia and the Federal Republic of Germany in 2020?

Competitiveness, prosperity and economic growth are three overarching objectives of both our EU Presidencies. At the same time, we want to strengthen solidarity between EU member states and reinforce the EU’s role as an internationally effective actor in an international order based on rules.

The opportunities offered by digitisation and innovation will also play an important role.

Overall, we want a close exchange with our European partners. This is of course particularly important for Croatia, which will hold the EU Council Presidency before Germany.

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In October, German Economy Minister Peter Altmaier is set to reveal more detailed plans for the establishment of a  landmark European Cloud initiative known as ‘Gaia-X.’

Is the so-called “Schwarze Null”, which refers to zero growth, that important? Why does Berlin not fulfil the expectations and demands for Germany to finally supplement its fiscal austerity programme with an investment and economic stimulus programme?

We are pursuing a future-oriented economic policy that promotes growth, and our public investments are at record levels. Since 2015, they have grown on average by around 7% each year. In the next three years alone, we will be investing an additional €54 billion in climate protection.

At the same time, we have introduced many tax breaks for citizens and companies. These benefits offer companies additional scope for innovation and investment in the future. After all, 90% of such investments come from the private sector.

We combine all this with a sound budgetary policy that, thanks to high tax revenues after many years of upswing and low-interest rates, leaves sufficient scope for investment.

But Germany seems to be on the verge of a recession – which could spread to the entire EU…

We expect the gross domestic product to grow by 0.5% in 2019. The domestic market remains robust.

It is true that the export-oriented German industry is in an economic downturn phase due to the emerging trade conflicts and a ‘cooling’ global economy.

But we are not in a crisis!

We already expect slightly higher growth of around 1.0% in the coming year.

All signs point towards recession in Germany

The ifo Institute for Economic Research has lowered its forecast for Germany’s economic growth for 2019 and 2020. Instead of the previously predicted 0.6%, the institute now expects a 0.5% growth rate for 2019. A potential hard Brexit and escalation of trade wars with the US were not taken into account. EURACTIV Germany reports.

The German-French proposals for a common EU industrial policy are also likely to be important in this respect. How are things progressing?

In February of this year, Germany and France presented proposals to strengthen Europe’s industrial and political competitiveness at the global stage, which we are already discussing with other EU member states. On 4 July 2019, France, Poland and Germany took a joint initiative to modernise EU competition policy.

I am pleased that the new European Commission has already announced a European industrial strategy, taking our basic requirements into account. We are now waiting for such a comprehensive and long-term industrial strategy from the European Commission.

As you have already stressed, how do you intend to protect Germany’s export-oriented economy against the tariffs announced by the US?

I regret the US decision to impose duties following the Airbus case. In this context, the European Union has submitted various proposals for negotiations.

In the end, the US is mainly harming itself through the tariffs. Higher tariffs will come at the expense of the US economy and consumers. Besides, the EU will soon also have a lever for sanctions when the Boeing case is decided upon [by the World Trade Organisation].

The two sides should, therefore, resolve this dispute through negotiation.

Europe looks for its ‘formula’ to create industrial champions

As Europe prepares for a comprehensive update of its competition, industrial and trade policies, experts and private sector representatives have warned against state interventionism proposed by France and Germany.

Would a stronger economic integration of the Western Balkan countries have a positive impact on their further progress towards EU membership?

I am convinced that South-Eastern Europe is a region of opportunities and possibilities. German small and medium-sized enterprises are committed to the region, and regional cooperation is continuously growing. This gives us an excellent opportunity to bring this region even closer to the European Union and to intensify economic cooperation.

As part of the Berlin Process, we are also working together with the German business community to establish a dual education system in the region.

The “Digital Summit” of the Western Balkan countries was also initially based on an initiative of the German government. This year’s Digital Summit in Belgrade impressively demonstrated the immediate positive results of such regional cooperation.

[Edited by Zoran Radosavljevic]

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