BayernLB

The time is not yet right for an economic stimulus package

Following the decline in GDP in the second quarter, Germany is in danger of slipping into a (technical) recession. In the current climate, calls for the government to launch an econom-ic stimulus package are growing louder. However, such a programme seems unlikely un-less economic activity takes a nosedive. Since the crisis primarily affects the export industry, it is also difficult to counteract it with a traditional investment scheme, as the German con-struction industry is at full capacity. But broad-based tax cuts could have a stabilising effect if the situation were to take a considerable turn for the worse.