Germany climbing out of economic slump: Central bank

German Economy Minister Peter Altmaier attends a recent sitting of the Bundestag, Germany’s lower house of parliament, in Berlin. (AFP)
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Updated 22 June 2020

Germany climbing out of economic slump: Central bank

  • Weidmann voices support for unprecedented economic rescue and stimulus packages to shield German companies and jobs

BERLIN: Germany has turned the corner on the worst of an economic crisis sparked by the coronavirus pandemic and is now on the path to recovery, the central bank chief of Europe’s biggest economy said.

“We experienced in the last months the deepest economic slump in Germany’s (post-war) history,” Jens Weidmann told Sunday’s edition of the daily Frankfurter Allgemeine Zeitung.

“The good news is: The trough should be behind us by now, and things are looking up again. But the deep slump is being followed only by a comparatively gradual recovery.”

Weidmann, who has never minced his words against expansionary policies ramped through in the past by the European Central Bank, on Sunday also voiced support for the unprecedented economic rescue and stimulus packages unleashed by Berlin to shield German companies and jobs.

Chancellor Angela Merkel’s government had stunned observers in March when it unveiled a rescue package worth €1.1 trillion, smashing through a long-held no new debt dogma to fund the measures.

Earlier this month, it said it would plow another 130 billion euros into various schemes, including a cut in VAT, to stimulate the economy.

Reacting to comments that Germany, once known as a “frugal” nation, was now dramatically loosening its purse strings, Weidmann said: “The image of the Swabish housewife is often wrongly portrayed.

“She is not saving for the sake of saving, but so that there is money that can be spent sensibly and in case there are difficult times. And that is precisely the case here.”

Like nations across Europe, Germany shut schools, shops and sent workers home from mid-March to halt transmission of the coronavirus.

The impact of the health crisis has pushed the economy into a deep recession believed to be the worst since the Second World War.

After the rate of new infections dropped sharply, Europe’s biggest economy began easing restrictions in early May although social distancing rules are still in place and huge events banned.

Nevertheless, the improved health situation and the huge government support have helped lift sentiment, with a closely watched survey showing confidence among investors surging to its highest level since before the financial crisis.

Spain, meanwhile, reopened its borders to European tourists in a bid to kick-start its economy while Brazil and South Africa struggled with rising coronavirus infections. 

Spain on Sunday ended a national state of emergency after three months of lockdown, allowing its 47 million residents to freely travel around the country for the first time since March 14. 

Spain also dropped a 14-day quarantine for visitors from Britain and countries in Europe’s visa-free Schengen travel zone to boost its vital tourism sector. But there was only a trickle of travelers at Madrid’s airport, which on a normal June day would be bustling.

“This freedom that we now have, not having to justify our journey to see our family and friends, this was something that we were really looking forward to,” 23-year-old Pedro Delgado said on arrival from Spain’s Canary Islands.

Virus cases were rising, however, in Brazil, South Africa, the US and other countries, especially in Latin America.

In Europe, one meatpacking plant in northwest Germany alone has 1,029 cases, so the regional government issued a quarantine for all 6,500 workers, managers and family members at the Toennies meat processing facility in Rheda-Wiedenbrueck.

British Prime Minister Boris Johnson’s government will announce next week whether Britain will ease social distancing rules for people to remain 2 meters apart. 

Business groups are lobbying for that to be cut to 1 meter to make it easier to reopen pubs, restaurants and schools, but that could also lead to more infections.

Britain has Europe’s highest virus death toll — and the world’s third-highest — at more than 42,500 dead.


Lee’s death sparks hope for Samsung shake-up, dividends

Updated 26 October 2020

Lee’s death sparks hope for Samsung shake-up, dividends

  • Shares in the company and affiliates rise; around $9bn in tax estimated for stockholdings alone

SEOUL: Shares in Samsung Electronics Co. Ltd. and affiliates rose on Monday after the death a day earlier of Chairman Lee Kun-hee sparked hopes for stake sales, higher dividends and long-awaited restructuring, analysts said.

Investors are betting that the imperatives of maintaining Lee family control and paying inheritance tax — estimated at about 10 trillion won ($8.9 billion) for listed stockholdings alone — will be the catalyst for change, although analysts are divided on what form that change will take.

Shares in Samsung C&T and Samsung Life Insurance closed up 13.5 percent at a two-month high and 3.8 percent, respectively, while shares in Samsung SDS also rose. Samsung Electronics — the jewel in the group’s crown — finished 0.3 percent higher.

Son and heir apparent Jay Y. Lee has a 17.3 percent stake in Samsung C&T, the de facto holding firm, while the late Lee was the top shareholder of Samsung Life with 20.76 percent stake.

“The inheritance tax is outrageous, so family members might have no choice but to sell stakes in some non-core firms” such as Samsung Life, said NH Investment Securities analyst Kim Dong-yang.

“It may be likely for Samsung C&T to consider increasing dividends for the family to cover such a high inheritance tax,” KB Securities analyst Jeong Dong-ik said. Lee, 78, died on Sunday, six years after he was hospitalized due to heart attack in 2014. Since then, Samsung carried out a flurry of stake sales and restructuring to streamline the sprawling conglomerate and cement the junior Lee’s control.

Investors have long anticipated a further shake-up in the event of Lee’s death, hoping for gains from restructuring to strengthen de facto holding company Samsung C&T’s control of Samsung Electronics, such as Samsung C&T buying an affiliate’s stake in the tech giant.

“At this point, it is difficult to expect when Samsung Group will kick off with a restructuring process as Jay Y. Lee is still facing trials, making it difficult for the group’s management to begin organizational changes,” Jeong said.

Lee is in two trials for suspected accounting fraud and stock price manipulation, as well as for his role in a bribery scandal that triggered the impeachment of former South Korean President Park Geun-hye. The second trial resumed hearings on Monday.

Lee did not attend the trial on Monday, as Samsung executives joined other business and political leaders for the second day of funeral services for his father.