March 24, 2008
In the economic policy debate, Germans tend to extrapolate their current situation indiscriminately into the future. When the economy hardly grew at all in 2002 and 2003, German economists and journalists were quick to estimate potential growth to be "below 1 percent". Now, with exports having grown strongly over a number of years, it is argued that the strong euro will not hurt German exporters even at a level of 1.60 $. Unfortunately, the arguments for complacency towards the euro are as dubious as those on the structural inability of the German economy to grow were five years ago.