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Country Report (1)

Country Report (1) - Germany Economic Report 1 Title...

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Germany Economic Report 1 Title: Germany Economic Report Name: Course Name: Date:
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Germany Economic Report 2 Germany 2000- present Global economic and financial crisis has adversely affected the economies world wide, similarly Germany has faced many difficulties ranging from declining economic growth to reduction in trade. Despite the fact that German economy is in the phase of recovery, a rise in unemployment rates and budget deficit is still expected to prevail in the near future if proper steps are not undertaken to reduce them. However, going over the economy’s past performance from the year 2000 onwards, more facts can be unveiled which can reveal favouravle policies for Germany to undertake inorder to rapidly improve its current situation. Reunification of East and West Germany in 1990 resulted into physical reunification of both the states, however, inner difference among these states remained. Various efforts to integrate these states were undertaken which incurred high costs and became a major contributor to a rapid decline in growth rate of the entire country. West Germany’s economy was performing well before the reunification, however, in its attemp to bring East germany up-to-the-mark, overall economic situation of the country deteriorated. Steps like one-to-one currency valuation and extension of social welfare systems to East were taken, however, this was done through budgetary tranfers to East which was financed by heavy borrowing by the government. Differences between both the states still persist, furthermore, government debt as percentage of GDP at present has doubled since reunification. Germany being a member of European Economic and Monetray Union (EMU) doesnt have an independant monetary policy. Expenditures were financed by issuance of bonds, therefore this Contractionary monetray policy
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