Latest News

Germany has fiscal buffers to withstand big energy shock – Scope

0

Germany has fiscal buffers to withstand big energy shock – Scope By Reuters

Breaking News

‘;

Economy 2 hours ago (Aug 29, 2022 08:01)

© Reuters. The head of new German Finance Minister Christian Lindner is pictured in front of the ministry’s logo during the handing-over of office at the German Federal Ministry of Finances in Berlin, Germany, December 9, 2021. Tobias Schwarz/Pool via REUTERS

BERLIN (Reuters) – Germany’s public finances are solid enough to withstand a major energy shock, even if persistent disruptions to gas supplies from Russia could hurt its growth prospects, credit rating agency Scope said in a study seen by Reuters on Monday.

The German economy barely grew in the second quarter, with the war in Ukraine, soaring energy prices, the COVID-19 pandemic and supply disruptions bringing it to the edge of a recession that the national central bank says is increasingly likely.

“Germany has the fiscal buffers and adequate financial reserves to weather a severe energy shock, though material damage to growth prospects could result from the continued disruptions of Russian gas supplies”, Scope analysts said.

Rating Germany’s sovereign debt ‘AAA’ grade with a stable outlook, the Scope analysts said the economy’s growth prospects had deteriorated significantly due to the war in Ukraine, forecasting growth of 1.6% in 2022 and 1.7% in 2023.

They originally expected more than 4% growth this year and 3% in 2023.

In their baseline scenario, the agency said sharp rises in energy costs coupled with new disruptions to global supply chains would lead to a recession – a contraction in two successive quarters – starting in the final quarter of 2022.

Even so, Scope expected Germany’s debt-to-GDP ratio to remain on course to fall below 65% by 2027 due to low interest rates and quickly recovering tax revenues after the pandemic.

Under a more pessimistic scenario with acute gas shortages, debt-to-GDP would rise to just over 75% in 2024. In comparison with European peers, this would still be modest: In Italy, the ratio is already some 150%, and in France it is around 113%.

“While economic damage would be unavoidable from Russia’s ‘weaponization’ of its energy exports, Germany maintains ample financial capacity for further temporary relief,” the Scope analysts said.

Germany has fiscal buffers to withstand big energy shock – Scope

EU Commission sells 2025 EU-Bonds at average yield of 1.695%By Reuters – Aug 29, 2022

(Reuters) – The European Commission, on behalf of the European Union, carried out on Monday an EU-Bonds auction. The results of this auction are as follows: EU-Bonds 04/07/2025…

Stocks and bonds slump, dollar hot as rate fever takes holdBy Reuters – Aug 29, 2022

By Dhara Ranasinghe LONDON (Reuters) – World stocks slumped on Monday as the growing risk of more aggressive interest rate hikes in the United States and Europe inflicted fresh…

EU needs majority voting in foreign, tax policy – ScholzBy Reuters – Aug 29, 2022

PRAGUE (Reuters) – German Chancellor Olaf Scholz is pushing for majority votes on foreign policy and tax issues in the European Union to prevent the bloc from becoming paralysed…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

© 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Goldman slashes British growth forecast, predicts Q4 recession

Previous article

Under shadow of war, Porsche gears up for market debut

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News