by Andrea Shalal
WASHINGTON (Reuters) – Fighting inflation is the government’s top priority, Germany’s finance minister said on Thursday, and called for reforms to make Europe’s largest economy Get out of the looming downturn.
Speaking on the sidelines of the IMF/World Bank meeting, Christian Lindner also called on China to play fair in global trade and said he had spoken with Beijing over its debt restructuring responsibilities had a conversation.
Lindner bluntly said that Germany is lagging behind because it is particularly vulnerable to the European energy crisis and supply chain disruptions, and because it has a complacent belief in its own economic strength.
“Inflation is the greatest danger to the foundation of our economy. Inflation erodes the foundation,” Lindner said in Washington.
“We are at a disadvantage compared to other powerful industrial nations,” he said. “We have been relying on our so-called advantage for far too long.”
The latest forecasts suggest Germany is on the brink of recession, while the central bank expects inflation to remain above 7% next year. Natural gas prices have soared amid the West and Russia’s energy standoff over Ukraine.
Chancellor Olaf Scholz’s coalition has prepared 200 a billion-euro package to ease struggling households caught in the energy crisis.
Lindner, speaking alongside Bundesbank President Joachim Nagel, said Germany has ways to address its weaknesses, including investing in alternative energy sources.
Lindner also joined the criticism of China’s failure to participate in the debt restructuring of low-income countries in a timely manner. China has argued that, in some cases, it will not get involved unless the IMF and World Bank also cut spending.
Germany is currently reviewing its China policy. Berlin fears it is too economically dependent on China, given concerns over industrial espionage, unfair competition and human rights abuses, which Beijing denies.
“I again use this opportunity to remind creditors, especially China, of their own responsibilities,” Lindner said.
“Not every creditor country is equally prepared to take more transparency stances. Regrettably, China did not accept the invitation to join the G7 roundtable with African countries. This will be noted and addressed .”