EU’s largest economy runs into debt

EU’s largest economy runs into debt

Usually, one problem snowballs into a large number of issues that could be settled only by means of money. Thus, the coronavirus pandemic hit both people’s health and the world’s economies. Some countries will hardly be able to recover. The fact is that even such big economies as Germany have to get into debt.

Germany that is one of the largest economies in the world announced that it sold 4.14 billion euros ($4.6 billion) of debt that mature in 10 years in an attempt to cope with the consequences of the economic slump. It was the largest 10-year issue since 2014. At the moment, demand for securities is declining whereas demand for the 10-year bonds is twice exceeding the offered amount.

However, there is no other way out. The current recession is the deepest since the Second World War.  Economists suppose that Germany’s economy may shrink by 6.3% this year. Since the 2008-2009 financial crisis, Berlin managed to cut the government debt from 80% of GDP to around 60%.  New loans are expected to increase the debt-to-GDP ratio to 77%. Thus, the economy will go back 12 years. 


Back

See aslo

Can't speak right now?
Ask your question in the chat.