German households' aversion to debt and firms' healthy profits mean Europe's largest economy should suffer little impact from credit market turbulence, a government economic adviser and economists said on Thursday.
Peter Bofinger, who sits on the government's panel of independent economic advisers, said Germans' low demand for big housing loans meant they were unlikely to feel the turmoil in credit markets stemming from the US subprime mortgage market. "We don't have private households that demand property credit on a large scale," Bofinger told Deutschlandradio Kultur.
"Our companies are in such a good earnings position that as the sector as a whole they have profits. That means we do not have the problem of a credit dynamic that has, so to say, driven the economy but which can stop it," he added.
Germans have far less exposure to the mortgage market than households in some other European countries, with a home ownership rate of around 40 percent, compared with over 80 percent in Spain.
Germans are also big savers. They put away 10.6 percent of their disposable income last year, compared with a negative personal savings rate in the United States. This means they are not directly exposed to a tightening in credit conditions.
"For households, I think it's basically not an issue," Bank of America chief European economist Holger Schmieding said of the credit market turbulence.
Shares slid in Europe and Asia on Thursday in another day of turmoil fuelled by fears that a crisis in the US subprime home loans sector will hit banks and snowball into something global.
The German economy, which grew at its fastest rate in six years last year, has been supported by strong foreign trade, rather than credit-fuelled consumer spending. Last year, Germany held its position as the world's top exporter. "The immediate domestic consequences will probably be very limited, because German corporates are at the moment having a very favourable profit situation," Schmieding said of the credit market turmoil.
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