[Editorial] Chancellor Merkel Drives Germany’s Economic Recovery

The economy of Germany, which was once labeled the “patient of Europe” with its chronic slow growth and high unemployment, has begun to show strong signs of recovery. Bloomberg says that the confidence of corporations reached its highest point in six years, while investor confidence hit a record high in 13 years. With the lowering unemployment rate, the consumer expectation index, which signals consumption increases, also went up to its highest level in seven years. The German Institute for Economic Research (DIW) revised upward this year’s economic growth prediction, from 1.2 percent to 1.7 percent on January 3.

Experts say that the German economy is turning around because of expectations of the country’s hosting of the FIFA World Cup, and improving economic sentiment thanks to Chancellor Angela Merkel’s business-friendly policies. The “Merkel factor” became effective six weeks after her inauguration.

In her inauguration last November, Chancellor Merkel made it clear that “economic recovery is a top priority.” In her New Year’s remarks, the Chancellor said, “I cannot accept the reality in which Germans willing to work cannot find a job,” stressing that job creation would be her top policy priority. She sent a clear message to the market, saying, “Economic growth is the only way to maintain the German’s tradition of a welfare society.”

True, the prospect of the German economy is not all rosy. The right-wing Christian Democratic Union of Germany and the leftist Social Democratic Party, which are the two pillars of the grand coalition, present different economic solutions, which limits the chancellor’s business-friendly policy. While the business community demands reform, which further reduces spending in the public sector and greatly addresses the rigidity of the labor market, public officials and the Social Democratic Party supported by the labor community oppose that. Even in this difficult situation, the chancellor’s “strong trust in market and consistent policy of market economy” are revitalizing the German economy. Her approval ratings soared 18 percentage points in just a month to 50 percent, which is something that President Roh Moo-hyun should dwell upon.

It is the fourth year of President Roh’s tenure. The president has every reason to blame himself for failing to turn around the people’s economic sentiment in three years, a much longer period than six weeks, the German chancellor’s time in office. It is not right just to present the “rosy picture” of 2010 or 2010, saying that people should view the economy with a long-term perspective.