• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Economics commentary. This article is about the performance of Germanys economy in the coming year after being affected by the global economic crisis in 2009

Extracts from this document...


´╗┐Title: Economy contracts in fourth quarter Source: South China Morning Post(HK) with agencies in Frankfurt Date published: Feb 25, 2012 Date accessed: March 2 2012 Syllabus the article related to: Section 3?Macroeconomics Word count: 732 ________________ This article is about the performance of Germany?s economy in the coming year after being affected by the global economic crisis in 2009, and how GDP changes in relation to consumption, exports and also public deficit. Gross domestic product (GDP) is the value of all final goods and services produced within an economy annually; stagnation is when growth in the real GDP is negligible (less than 2-3%) and is sometimes used to describe low trading volume. Due to the global economic crisis, European countries cut their spending on domestic and foreign goods. Germany is affected since most of its goods are exported to Europe. Private consumption within Germany also decreased, dragging GDP down by 0.2% in the forth quarter of 2011. ...read more.


But this would increase public deficit, leaving Germany to either decreases public deficit or improves economic growth. Since it is a member of the Eurozone and its deficit to GDP ratio must be lower than 3% or it will face penalty, it seems rational to continue its efforts to reduce its deficit. Yet, because its debt-to-GDP ratio is quite low, an economic growth is more desirable such that the resulting deficits will be paid for by an expanded economy if expansionary policy is employed. Germany can also consider diversifying the market of its domestic products such that net exports increases, ensuring a stable export performance and reducing the effect of shocks from external demands. German producers can expand their market to some developing countries to their expand income sources. Emerging economies, such as India and China, are dependent on commodity products but also have the buying ability especially for goods with better quality. By increasing the competitiveness of their products, such as price and after-sales service, German firms can compete with producers from non-Europe region. ...read more.


Europe's fiscal turmoil has forced governments and consumers across the 17-nation euro economy to rein in spending, damping demand for German goods in its biggest export market. Europe's largest economy may avoid a recession, defined as two successive quarters of declining GDP. "The German economy is in a soft patch that it is going to overcome," said Gerd Hassel, an economist at BHF Bank in Frankfurt. "The fundamentals of the economy are different from countries like Spain and Italy. They're basically sound." The GDP data published yesterday shows that the contraction in activity was mainly due to a 0.8 per cent drop in exports, traditionally the main driver of growth in Germany's economy. Economists now expect the economy to stagnate in the first quarter of this year, dodging the two quarters of negative growth which define a recession, before recovering from the second quarter. After emerging from the 2009 recession with a record 3.7 per cent growth in 2010 and 3 per cent growth last year, the Bundesbank predicts the German economy will expand 0.6 per cent this year. This is compared with Italy's 1.3 per cent. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Growth and Development Problem Set - IB Economics exam questions and answers.

    An externality can be either positive or negative. (Example: pollution emitted by a factory). Sustainable development focuses on four main objectives: (1) social progress, (2) effective protection of the environment, (3) prudent use of natural resources, (4) maintenance of high and stable levels of economic growth and employment.

  2. Economics commentary - The economic crisis caused deflation in 2009, but consumer price levels ...

    of production of goods, particularly energy-intensive processes and transportation, and lower real wages and a lower level of economic activity. However, once the economy adjusts, ceteris paribus, there should only be an increase in price level, and no continuous increase.

  1. IB Macroeconomics Commentary

    Furthermore, unemployment leads to decreased expenditure as residents are unwilling to spend whatever is left of their disposable income. As a result, the government will collect less revenue from sales tax. The workers that lost their jobs in sectors related to real estate will eventually get their jobs back once the economy experiences higher levels of economic activity.

  2. Economics Extended Essay - To what extent has the market for paintings in South ...

    Also demand in the art market had expanded manifold during the boom phase of the economy and so prices were high. The case of the art market was different from traditional markets. It had been in a period of expansion just before the slowdown and so it would be affected differently as compared to other markets.

  1. LDC Essay Economics Barriers to Growth

    Assistance to developing economies comes in a number of different ways. The largest single source is known as aid. This can be given in three main ways. Firstly, Humanitarian aid can be both by an individual country to country and via a major organization such as one of the UN agencies like UNICEF.

  2. Free essay

    russia's transition economy

    and as the prices of those resources are so high these people were going to be richer and richer, but since 24th July 2008 the price of oil has lost more than 1/3 of its record pick in 147$ per barrel on 11th July 2008.

  1. Explain why the debate about global warming suggests that current economic growth is not ...

    According to the IPCC, the average temperature of the world will increase by 5 degrees Celsius in 100 years; currently there are longer summers due to global warming. This has elongated the pests? lifetime and has increased the allergy season, as a result there is loss of timber due to

  2. International Trade Economics Commentary. In hope of shifting the Eurozone economy closer to ...

    An expansionary fiscal policy would prove impractical for Spain and Italy aiming for full employment as the increase in reluctance over their deficits and debts has triggered amassing borrowing charges from the private sector. The ECB as Krugman debates should carry on playing a growing part in the development of

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work