I expect the German economy to withstand the challenges arising from a Trump presidency. German companies are competitive, flexible and well diversified globally. I don’t expect that Germany’s trade with the USA will suffer significantly. My main concern is the European economy, which is still mired in a deep economic and financial crisis. The US election makes it more urgent than ever to speed up reforms and give the European economy a growth stimulus. I expect the euro to appreciate
An important aspect, that has been widely ignored in the debate about the consequences of a Brexit, is the impact on ECB monetary policy. Lower oil prices and a weaker economy in the euro zone and in Germany are likely to increase deflationary pressures further. As a consequence, the ECB is likely to extend its expansionary monetary policy path further into the future. The Brexit will most likely imply a longer period of zero interest rates for the euro area.
Nowhere in Europe are income, wealth and opportunities as unequally distributed as in Germany. “Germany’s social market economy no longer exists”, says Marcel Fratzscher from the German Institute for Economic Research.