Merkel awarded Peruvian gold medal at Lima Summit

German Chancellor Angela Merkel has been awarded the honorific del Sol, or Sun Order, medal of Peru on her recent visit to South America.

Published: 17 May 2008 10:36 CEST

Merkel awarded Peruvian gold medal at Lima Summit

The two leaders embrace. Photo: DPA

Merkel is the third German politician to receive the prestigious medal, hand crafted from solid gold, joining past Chancellors Ludwig Erhard (CDU) and Willy Brandt (SPD).

Merkel is one of 27 European representatives of industry and commerce attending the Lima Summit this month along with 33 South American leaders, to discuss EU and Latin American relations.

The German Chancellor has proved to be a prominent representative of Europe at the conference, despite controversial remarks from Venezuelan leader Hugo Chavez, who recently claimed that Merkel was a political descendent of Hitler.

In a turn around Chavez offered his hand to Merkel in front of the National museum of Lima on Friday, warmly greeting her and offering his apologies.

“I have told the German chancellor, if I was too hard on you please forgive me. I offer you my hand.” Chavez later explained, reported German daily Der Tagesspiegel.

Merkel accepted the Venezuelan’s hand shake, but was eager to focus on the main issues of how the two continents can work together to fight poverty and climate change.

One major concern is the unrivaled production of biofuels in South America that could have drastic effects on the Amazon rain forest. As one of the planet’s largest CO2 reducing areas, plans to clear parts of the rain forest worry world leaders, as the plants’ reduction of global CO2 levels would be greatly effected.

Merkel hopes the Summit will be a chance to develop relations between the 60 cities of the EU and Latin America attending the Lima meeting.

“It’s a chance for the two continents to move closer to each other,” she said before her trip to Lima.

This years’ Lima summit was the fifth time that representatives of the European Union and Latin America have met.

The EU invests approximately €500 million in the South American continent each year.

Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.