Because they’d be backed by the collective power of so many countries, including Germany, they’d carry a low interest rate. These would be bonds issued jointly by all 17 countries in the eurozone. Germany has resisted proposals for so-called eurobonds. Perhaps the biggest issue is how a recession in Germany would affect its willingness to put its stellar credit rating behind weaker countries so they could borrow affordably. Other forecasts range from 0.5 to 1.0 percent. The government predicts 0.7 percent growth this year. 10-year Treasury note.īut the risks of a downturn are growing. The interest rate on Germany’s 10-year bond is just 1.56 percent - even lower than the rate on the U.S. Germany’s exports to China surged 15 percent last year and contributed significantly to Germany’s 3 percent growth in 2011.įear of a catastrophe, possibly resulting from a Greek exit from the eurozone or the need to bail out a big economy like Italy’s, could make German businesses scale back plans to expand.Įconomists still foresee modest growth in Germany this year, whose gross domestic product totaled (EURO)2.57 trillion ($3.42 trillion) in 2011 and accounted for 27 percent of the eurozone’s economy. Asia accounted for 16 percent of German exports. Slowing growth by its trading partners in Asia is also affecting Germany’s economy. Recessions in Greece, Spain, Italy and Portugal are weakening demand for those goods. Nearly 60 percent of Germany’s exports go to the 27 countries in the European Union. And the euro’s value, held down by weaker nations in the currency alliance, has made German goods affordable for foreign buyers.īut Europe’s raging debt crisis threatens the entire continent. Low interest rates have made it easy to borrow and invest. German autos and other products have been selling well in China and North America.
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