BERLIN — If there’s one factor that could be described as the key to Angela Merkel’s longevity as German chancellor, it’s the economy.
German output has expanded in all but one of her 14 years in office, stuttering only during the financial crisis of 2009. Though growth has been modest, averaging about 1.6 percent during her tenure, it’s been fairly steady, ensuring Germans have the stability they crave. Some economists even refer to the Merkel years as a “golden” era for Europe’s largest economy.
But now, just as Merkel enters the final stages of her chancellorship, her Midas touch appears to be fading. News last week that the German economy had contracted in the second quarter of the year sparked fears of a looming recession. If that happens, the effects would be felt far beyond Germany’s borders, with the impact rippling across the Continent.
Despite loud calls from industry for government stimulus to boost the economy, Merkel’s government has so far taken a wait-and-see approach. Finance Minister Olaf Scholz said this week that the government is prepared to spend as much as €50 billion to “counter a crisis with full force.” The coalition also agreed to all but scrap the so-called solidarity tax, imposed in the 1990s to help rebuild former East Germany, a step many hope will give the economy a much-needed jolt.
