Germany had no property bubble. Its workers have long settled for modest pay rises. Its businesses and its consumers have been prudent about debt. Recent governments have endured political pain to enact growth-boosting reforms. Yet none of these things will spare Europe's largest economy from the turbulence beyond its borders. In a global slowdown, Germany's three-year-old economic recovery is likely to continue, but at a slower pace. In a way this is a pity, for only the prospect of more serious meltdown could goad Germany's political leaders to make further reforms. At first sight Germany looks well placed to cope with adversity. It is one of few countries to "reindustrialise", notes Bert Ruerup, head of a committee of economists who advise the government. This is largely built on its prowess as an exporter, especially of capital goods. Less than 9% of Germany's exports go to the United States, so its direct exposure to an American slowdown is modest. Buyers of German machines are less sensitive to price than, say, consumers of Italian clothes, offering some protection against a strong euro. The credit crunch begun by the American sub-prime-mortgage mess will rattle Mediterranean companies more than German ones, which finance themselves mainly out of profits. "The private sector is not overstretched at all," says Dirk Schumacher of Goldman Sachs.
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