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There may be nervous chatter about a “double-dip recession.” But Europe’s largest economy doesn’t seem to be paying attention. Germany posted strong growth from April to June. The World’s Jason Margolis tells us what the good economic news in Germany means for Americans. Download MP3

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JEB SHARP: I’m Jeb Sharp and this is The World, a co-production of the BBC World Service, PRI and WGBH Boston. There may be nervous chatter about a “double-dip recession,” but Europe’s largest economy doesn’t seem to be paying attention. Germany posted strong growth for its second quarter, from April to June. The World’s Jason Margolis tells us about the good economic news in Germany and what it means here in the US.

JASON MARGOLIS:  It’s been an impressive turnaround for Germany. Last year its economy shrank by nearly 5%. Today, Germany posted its fastest pace of growth in two decades. Germany’s economic minister, Rainer Bruederle, said the new figures show that Berlin could continue to rein in its budget, and post positive growth.

GERMAN SPEAKING

MARGOLIS: Bruederle said Germany is out of the economic crisis. He said Germany did this by increasing its exports. Norbert Walter, a former chief economist at Deutsche Bank, argues that Germany’s export growth is not just good for Germany.

NORBERT WALTER: We are part of the European fabric. The Dutch economy, the Belgian economy, the Austrian economy will flourish if the German economy is doing well because no German car leaves the country without an axle that comes from Belgium.

MARGOLIS: As for what Germany’s growth means for the US, here’s economist Desmond Lachman at the American Enterprise Institute in Washington.

DESMOND LACHMAN: It’s certainly good news that if Europe is growing strongly that improves the prospects for the United States to export abroad.

MARGOLIS: American exports to Germany have increased in recent months. But so has the US trade deficit with Germany. Germany exports things to the US like cars, chemicals and beer. Lachman and many others criticize countries like Germany, and China, for powering their economies through exports without doing enough to encourage domestic consumption. In the case of Germany, Lachman faults the government’s current fiscal programs.

LACHMAN: There’s no need for them to be moving towards budget balance, which is what the longer term objective of Germany is. Germany has now got a constitutional amendment, which requires them to balance their budget on a structural basis by around about 2015. That to me seems irresponsible.

MARGOLIS: Economist JD Foster at the Heritage Foundation disagrees with such criticisms of Germany. He says Germany and China are not the same. China gives itself an artificial advantage by manipulating its exchange rate. Foster says that’s not what Germany is doing.

JD FOSTER:  Germany is operating within an exchange rate set by a group, the Euro. Germany as a country chooses to save a lot and invest a lot. And that allows them to export a lot.

MARGOLIS: While Foster welcomes today’s news from Germany, he, and others, warn that it’s just one quarter of strong economic growth. Foster says remember, the European economy is still rife with problems.

FOSTER: Europe papered over its problems with Greece and that will last for a while until the paper runs out and Greece has to finally face up to its unsustainable, fundamental economic circumstances which are going to bedevil Europe for quite some time.

MARGOLIS: And in a tightly woven global economy, what bedevils Europe can also bedevil the United States. For The World, I’m Jason Margolis.

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