• 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. IB Macroeconomics Commentary

    The demand for labor will decrease from Q to Q1. The distance from point A to point B represents the quantity of cyclical unemployed people. As the economy moves towards point B in Figure 2, the peak of its business cycle, employment for these individuals will be restored.

  2. Economics commentary on SpiceJet buys 30 Q400 aircraft from the times of India (website) ...

    Additionally it makes sure that SpiceJet would be less prone to criticism from NGOs or other pressure groups. Q400 is considered to be the "best short-haul plane" and comparatively is more comfortable than other planes like it. This will increase the demand of this series of aircraft and most probably

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

    The petrol and diesel component accounts for close to a half of the energy component of the HICP and was among the largest contributors and most volatile components in HICP annual inflation over recent years. However, even though Ireland has the lowest energy intensity in the euro area, a large

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

    credit to cash strapped European governments; with the intention of preserving low interest rates to prevent the crowding-out of private spending?s. The problem of inflation in Europe?s current recessionary atmosphere should be a rather miniscule concern. It is only when the confidence of private sector stakeholders has returned (a circumstance requiring small borrowing cost)

  1. 15 Historical Economic Questions on Mercatilism and the Development of European Countries.

    The cultural change in thought was led by two brilliant philosophers of the time; Voltaire otherwise known as François-Marie Arouet and Nicolaus Copernicus. Nicolaus Copernicus's scientific revelations changed the fundamental way of thinking. This brought question to the true role of religion or a higher power in the structure of a society.

  2. Economics Commentary - the article is about the rising tariffs in the trade ...

    firm produce will no longer limited by the trade restrictions, that is, the reduction of any trade restriction expand in the size of the market, allowing firms to produce more output, achieve economies of scale with the benefit of lower cost.

  1. Defining Fiscal Policy and its application in India.

    In this way adverse balance of payment can be corrected either by imposing duties on imports or by giving subsidies to export. 8. Capital Formation The objective of fiscal policy in India is also to increase the rate of capital formation so as to accelerate the rate of economic growth.

  2. 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

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