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German Budget Deficit Doubles in 1st Half of 2010
Aug 25, 2010 11:21CST
Source:SMM

BERLIN, Aug. 25 -- German budget deficit soared to 3.5 percent of its gross domestic product (GDP) in the first half this year, doubling itself on a yearly basis, with the country's energetic growth in the same time, official figures showed Tuesday.

The Federal Statistical Office said in a report that Germany's public deficit reached 42.8 billion euros (54.4 billion U.S. dollars) in the first six months this year, jumping more than 100 percent from the same period of 2009, which were 18.7 billion euros.
According to current prices, the deficit accounted for 3.5 percent of Germany's economic output, still above the maximum limit of 3 percent of GDP set by the European Union's Stability and Growth Pact.

"The impact of the economic and financial crisis and of the relevant government measures taken to support the economy and the financial markets is clearly reflected now in the budgets of the central, state and local government as well as the social security funds," the office said.

German economy, Europe's largest, contracted 4.7 percent last year under the context of global financial crisis, marking the worst recession since WWII. However, its pace of recovery began to accelerated in spring.

On Tuesday, the statistical office also confirmed its preliminary statistics released in earlier August, saying that the German economy surged 2.2 percent in the second quarter of 2010, the largest since records for a reunified Germany, which started in 1991.
The sharp upswing of exports, as well as pickups in investment and factory orders since spring, strongly boosted the country's economic rebound. Latest figures showed that German exports surged 3.8 percent in June from May, raising the country's trade surplus to the highest level since October 2008.

The German government said in July that since promising economy brings about more tax intakes and less spending on social insurance, it would manage to slash its deficits to 4.5 percent of GDP this year and the EU's deficit target of 3 percent in 2012, which was one year earlier than previously expected.

After the outbreak of Greek debt crisis, Germany called on eurozone partners to firmly take austerity measures for "a sustainable path toward economic growth" and pledged to cut 80 billion euros in budget over the next four years, the country's largest saving projects since 1945.
 

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