As Europe’s political celebrities pack warm for the World Economic Forum in Davos next week, expectations of what they’ll achieve there are about as low as their economies’ growth rates.
The Swiss mountain-resort pow-wow is shaping up to be a muted deliberation about where on earth economic growth is going to come from, given that taming the European debt crisis has gone hand in hand with torpedoing output.
Angela Merkel, Germany’s Chancellor and one of the very few women in the pantheon of Davos deities, may have just as much reason as the others for glum circumspection: Germany’s economy, long the motive force for a stalling Europe, could already be in a glacial decline.
There are voices signaling the end of Germany’s era of economic leadership. Joerg Asmussen, a European Central Bank board member and a former junior minister under Merkel, has warned twice in just over a month that Germany could be the “sick man of Europe” again within five years if it doesn’t begin economic reforms.
After last year’s blockbuster OMT program from the European Central Bank in Frankfurt, there might not be much help from monetary policy this year. Interest rates are already at a record low. Painful, slow-moving, politically-costly reforms aren’t sunny thoughts for politicians who, like Merkel, will have to fight elections this year. Having arrived in Davos, the Chancellor may well fancy staying a while.