Germany's Economy

One of the few economies in the euro zone that was considered stable during the 2008-09 recession was Germany.  Germany’s GDP is worth $3310 billion it is 5.34% of the world economy according to the World Bank.  The country’s economy is the largest in Europe and the 5th largest in the world in purchasing power parity terms according to The World Factbook.   Germany is an export-oriented economy it leads in exporting machinery, chemicals and vehicles.  Their GDP contracted by 5% in 2009 and grew 2.7% in 2011.  The increase was led by more manufacturing orders and exports that came from outside the euro zone.  According to Forbes there were 55 German billionaires reported this year that is the fourth highest number worldwide.

The central bank in Germany projects their GDP will grow about 0.6% in 2012.  It is no secret that Europe is hurting right now but then again so are the rest of us we are not out of the water just yet. The fact that the U.S. stock market recently took a fall starting the day the fed announced no signs of more stimulus makes it obvious.   Although Germany is strong it cannot take on the burden of the European financial crisis without taking a significant hit to their own economy. 

The German unemployment rate was steadily falling before 2008-09 and slightly increased due to the great recession then it continued to drop but starting in 2012 it has picked up and was last reported at 7.4%.  The country’s consumer confidence increased from 5.4 in February 2012 to 22.3 last month.  Germany’s inflation rate is currently at 2.1% and since it is part of the EU it is pegged to the Euro Area interest rate.  The interest rate is currently at 1% these decisions are taken by the Governing Council of the European Central Bank.

The DAX is a major stock market index that tracks the largest companies based in Germany, it has declined 253 points in the last month.  It was last trading in the 6,552.32 – 6,743.01 range one of the top performers was Merck KGaA a pharmaceutical company that researches drugs in neurodegenerative as well as autoimmune and inflammatory diseases.

Europe is still in a financial crisis, the strong players are not immune and neither is the rest of the world.  China is also slowing down and they are getting pressured to let the Yuan appreciate.  The U.S. is starting to see slow growth but it still needs to improve its job market.  Despite the clouds there may be a pleasant surprise in store for us inflation though is the wild card.  Will it affect our recovery?