A return to Germany's Deutsche mark could lead to a 15%
contraction in the country's economy over two years, the chief
economist of German insurance firm Allianz SE (AZSEY) warns in an
opinion piece published Monday.
A new German currency would probably appreciate by a "massive"
15% to 20% against the currencies of the country's trading
partners, leading to a drop of up to 20% in German exports and a 5%
drop in gross domestic product within a year, Michael Heise writes
in German newspaper Die Welt.
Given that a return to the D-Mark would probably also lead to a
"complete break-up of the euro zone," the ensuing banking crisis
and collapse in European growth would probably reduce German
economic growth by a cumulative 15% over two years, Mr. Heise
says.
The impact of a break-up of the currency union would be a "far
stronger shock than the Lehman Brothers crisis," the economist
warns.
In the ensuing years, the higher cost of producing goods in
Germany would encourage companies to move capital out of the
country, he said.
"Over four or five years after a break-up of the currency union,
the German economy is likely to suffer production losses of up to
25%, compared with normal economic development," Mr. Heise
says.
Write to Tom Fairless at tom.fairless@dowjones.com
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