Comment on German economic fears growing but Merkel strong

German economic fears growing but Merkel strong

While Merkel's measured approach has helped the perception that she is steering the country deftly through chaotic times, she also benefits from the fact that Germany is not in as vulnerable a position as others, especially Eastern European countries. If Russian President Vladimir Putin stopped gas flows from Russia completely — something Merkel has noted didn't even happen at the height of the Cold War — Germany could increase supplies from elsewhere, albeit at greater cost. [...] while the second quarter 0.2 percent contraction is seen largely as a temporary slowdown due primarily to a mild winter and other one-off factors, Merkel did caution this week that the Ukraine crisis remains an "uncertainty" for the economy. Germany's Committee on Eastern European Economic Relations, a joint organization of leading business associations, already estimates that in the first half of the year, sanctions and political tensions contributed to a 15.5 percent decline in exports to Russia. Early in the crisis, businesses had been largely against trade measures against Russia, but the powerful Federation of German Industry in July backed the possibility of more sanctions following the downing of Malaysian Airlines Flight 17 — saying that they may come at a painful cost, but should not be ruled out.

 

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