Germany Injects 1.5 Billion Euros in the Auto Industry
As Reuters reported, 1.5 Billion Euros of the whole amount will go to the auto industry. The measures also contain incentives worth 2, 500 euros for new car purchases.
"A government growth program like this, combined with measures taken in neighboring countries, cannot prevent recession but can limit its severity. That is the goal," German Finance Minister Peer Steinbrueck told the news agency.
"Together with the steps we took in November, this is the biggest growth package since 1949. We are talking about a fiscal boost of over 80 billion euros," he added.
Merkel's government has already approved an aid package for the country's economy valued at 31 billion euros late last year and therefore, Germany's chancellor had her reserves regarding another one.
However, with the gloomy perspectives in the auto industry for this year, the aid package is highly welcomed. Industry analysts J.D. Power forecast a worldwide fall in auto sales of 8.2% in 2009. J.D. Power and Associates president Finbarr O'Neill, speaking at the Society of Automotive Analysts outlook conference at the Detroit auto show, predicted a 12.3% drop in North American sales this year and a 14.9% drop in Europe.
Still, voices in Germany say the country's economy won't recover that easily despite the aid package. "I don't think we will get out of recession quickly with an economic stimulus package -- no matter how it's put together," said Kai Carstensen, head of economics at the Munich-based Ifo institute.