The world could face high inflation when the global economy recovers, Peer Steinbrück, German Minister of Finance warned the tabloid daily Bild: “So much money is being pumped into the market that capital markets could easily become overwhelmed, resulting in a global period of inflation in the recovery.” Steinbrück is in agreement with Chancellor Angela Merkel, who had previously warned that pumping too much money into the market might create trouble during recovery. Asked about how the crisis should be fought, Steinbrück conceded, however that there were “no intelligent alternatives” to extensive public investment programs.
Because of its strong reliance on exports, the German economy has been particularly affected by the global economic downturn. The German economy is expected to shrink by 4.5 – 7 % this year and to show its lowest inflation rate in the last 11 years.