ASSESSMENTS

A Convergence of Issues Weighs on Germany

undefined and Director of Analysis at RANE

Adriano Bosoni

Director of Analysis at RANE, Stratfor

Feb 13, 2020 | 17:23 GMT

This photo show former German Christian Democratic Union party leader Annegret Kramp-Karrenbauer, who resigned earlier in February.

The resignation of Christian Democratic Union party leader Annegret Kramp-Karrenbauer, who many thought would succeed Angela Merkel as German chancellor, has proven to be a distraction for Germany's governing coalition.

(ODD ANDERSEN/AFP via Getty Images)

Highlights

In 2020 Germany's fragile government will become increasingly ineffective, but the members of its governing coalition, worried about a weak electoral performance, will be motivated to avoid early general elections.
The pace of German economic growth will likely continue to be slow in 2020, but divisions within the government will prevent Berlin from introducing a substantial stimulus package, but modest tax cuts and spending hikes are possible if economic performance is worse than expected.
Germany will support EU trade deals with the United Kingdom and the United States, but conflicting interests within the bloc will create obstacles towards resolution.

Companies and households in Germany will face several sources of risk throughout the year, including political risk from the country's fragile government coalition; economic risk connected to global trade uncertainty and threats to Germany’s exports; and institutional risk, caused by strategic divisions within the European Union that will make it hard for the bloc to implement policy. Germany will continue to be stable and prosperous in 2020, but these risk factors could prove disruptive for business, investors and individuals in the country....

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