Merkel Economy Shows Neglect as Sick Man Concern Returns – Bloomberg 01-09-13

Salient to Investors:

Investors, economists and policy makers are starting to warn Germany is turning a blind eye to its own weaknesses. Irwin Collier at Freie Universitaet said it is clear things have to change at home too.

The DAX Index rose 29 percent in 2012, its best in 9 years.

Juergen Michels at Citigroup said until now Merkel has profited from her predecessor but something really has to happen, or else.

Gerd Langguth at University of Bonn said Germany has to cut back, and can’t continue backing euro-area rescues with cash and guarantees.

Eurostat said that within 20 years there could be as few as two people of working age for every pensioner versus 4 now, the most acute aging problem in Europe. Germany at 1 percent per year has the lowest long-term GDP growth outlook of any OECD member, followed by Japan.

Carsten Brzeski at ING said aging will clearly hurt growth and there is no clear strategy on how to tackle the problem. The WEF ranks Germany 112 out of 142 countries in flexibility of its labor rules. The OECD says over 60 percent of women between 25 and 54 with children work part-time, versus 25 percent in France.

Not one German university lists in the 2012 US News World’s Best Universities Ranking. Andreas Scheuerle at Deka Bank said the success of the German economy has come from more vocational training, but creating products for the future need universities.

Eurostat predicts a decline in productivity of 0.2 percent in 2012 and growth of 0.5 percent in 2013. Christoph Kind at Frankfurt Trust said the concern over German competitiveness long-term is completely justified – there has not been any reform since Merkel took office.

Read the full article at http://www.bloomberg.com/news/2013-01-09/merkel-economy-shows-neglect-as-sick-man-concern-returns.html.

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