By Andrea Thomas
BERLIN--Global political crises will leave skid marks on
Germany's economy, the country's Finance Minister Wolfgang Schäuble
warned Monday, pointing to present conflicts in Ukraine and the
Middle East.
The comments come after Chancellor Angela Merkel also said
earlier Monday that tougher economic sanctions against Russia will
probably hurt German businesses.
"As a result, we will have a rather difficult economic situation
in the near future," Mr. Schäuble said at a conference on "20 Years
of Core Europe," organized by the European Democracy Lab in
Berlin.
The government has forecast the German economy to grow by 1.8%
this year and 2.0% in 2015, but business sentiments deteriorated in
recent months amid geopolitical uncertainties, which some
economists have said might prompt the government to lower its
forecast at its regular review in autumn.
Commenting on the state of the euro zone, Mr. Schäuble warned
that the 18-member-strong bloc, which, for the past several years,
has dealt with weak economic growth and mounting sovereign debt,
isn't yet out of the woods.
"We have gotten out of the euro crisis to some degree, but we
haven't turned the corner as clearly as we should have," he said,
pointing to high unemployment and overly low investment levels in
the area.
He reiterated Germany's position that structural reforms and
sustainable fiscal policy, which means cutting deficits, are needed
to overcome the crisis, and it is important for European countries
to stick to the rules that they have agreed to.
Too many European finance ministers believe that public
investments will help solve the area's economic problems, he
criticized, adding that cheap financing isn't a panacea. "We need
investments that prevail on markets," he said.
Germany had been one of the main proponents of an austerity
policy during the current crisis, and has been cautious about
proposals from France and Italy to focus more on growth-boosting
measures and less on deficit reduction and structural reforms.
Some pessimists fear that the sovereign debt crisis, which
peaked two years ago, might get back into the spotlight given the
still-high debt levels in many member countries.
European Union leaders plan to discuss the economy amid concerns
about the bloc's fragile recovery and low inflation in a meeting in
Italy in October.
Write to Andrea Thomas at andrea.thomas@wsj.com