Macro Weekly – What’s up with Germany?

The German economy has slowed sharply and looks to be in recession.The underperformance of the German economy reflects its heavy reliance on exports, particularly capital goods.Meanwhile, households have stepped up savings, leading to a slowdown in consumer spending.A much-needed transition towards domestic demand is badly needed for Germany and the eurozone.The large current account surplus is the flip side of a domestic savings glut.Germany has room to increase government spending, cut taxes and raise wages.