Phaara
Business Reporter, BBC News
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According to the president of the German central bank.
The German economy has contracted in the past two years and with prices, the country “could also expect a recession for this year,” said Joachim Nagel, Deutsche Bundesbank chief, told BBC World Service in an exclusive interview.
Without prices, the bank plans that the German economy will stagnate but will increase, by approximately 0.2%, he added.
He said that “there are only losers” when they impose prices and have supported the EU reprisal measures against the 25% price of US President Donald Trump on all steel imports abroad.
Prices are a central element of Trump’s overall economic vision – he hopes they will stimulate American manufacturing and protect jobs, but criticism say that during the immediate term, they will increase the prices of American consumers.
In response to Trump’s decision, the EU retaliated with import taxes on a range of American products, which should come into force on April 1.
Nagel described Trump’s pricing policy “the economy of the past” and “certainly not a good idea”.
A World Trade War is one of the concerns of prices and reprisals, he said, but added that it was a “necessity” for the EU to react “because if something works against you, you cannot accept a policy like this”.
However, he suggested that when the United States will realize that the price that must be paid will be “the highest on the side of the Americans”, this will allow all parties of all the parts to achieve a different resolution.
“I hope that in the end, good policy will succeed,” he said.
The German export economy had been one of its forces in recent decades, and its cars such as BMW, Mercedes, Volkswagens and Audis are popular in the United States.
Nagel refuted the claims that Germany was “the sick man from Europe”, saying that she had a “strong economic basis” and “small medium -sized companies”.
“But nevertheless, when you are exposed to an export-oriented model, you are more exposed in a situation where prices are increasing and there are so many uncertainties, so many unknowns,” he added.
He said Germany could overcome such challenges “over the next two years”.
However, German consumers are expected to cope with higher prices.
The chief of the German Federation of the BGA of Gros, trade and external service, Dirk Jandura, warned Wednesday that the Germans may have to dig more deeply in their pockets to pay American products, such as orange juice, bourbon and peanut butter, supermarkets.
‘Tectonic changes’
Commenting on the recent unprecedented changes in Germany’s economic policy, which have been changed, allow the country to borrow more for defense and infrastructure, Nogel said it was an “extraordinary measure” for “extraordinary time”.
“The whole world is faced with tectonic changes, which makes the current situation very different from those observed in the past, hence the tax change,” he said.
He added that the change of policy would allow Germany a certain financial breathing room for the resumption in the coming years, adding that it has provided a “signal of market stability”.
