German GDP rises by 1.5% in the first quarter
STEVE CHIOTAKIS: European economies are reporting a rebound today. Germany said its Gross Domestic Product rose 1.5 percent in the first quarter. And even bailed out Greece showed a little growth.
Marketplace’s Stephen Beard, is with us live from London. Stephen, Germany seems to be the star performer here. Why is it doing so well?
STEPHEN BEARD: Exports and retail spending. The Germans are pouring their cars and their machinery into China and the boom has spread into the economy back home. Unemployment’s fallen sharply. And the Germans are shopping.
CHIOTAKIS: How does Germany, Stephen, compare to those infamous economies in the southern region?
BEARD: Well, you mentioned Greece, which, rather surprisingly after a year of recession is bouncing back a little bit. But the rest of the southern euro zone is not looking too hot. Italy — barely growing. Spain — not doing much better. And Portugal — in recession. The message here, says German economist Holger Schmieding is that unlike the southerns, the Germans knuckle down and put their economic house in order.
HOLGER SCHMIEDING: They did cut public spending, and they reformed the labor market as the welfare system. It took a few years of pain, but after the pain, they are now seeing the gain.
And that’s the message the Germans have been preaching to those heavily in debted southerners. But there’s a paradox here Steve. Part of the reason that Germany’s exports have boomed is because the Euro’s been pushed down by all the worries about a default in Europe. So while the German’s grumble about having to bailout the Greeks, the Irish and the Portuguese, Germany has actually profited from the euro zone debt crisis.
CHIOTAKIS: Quite the irony. All right, Marketplace’s Stephen Beard. Stephen thanks.
BEARD: OK Steve.
CHIOTAKIS: The European Union by the way today said Greece, Ireland and Portugal’s debt loads will be much bigger than it originally thought. And that’s adding to fears the bailouts are not working.
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