ECON1192 - Macroeconomics 1
Assignment:
Macroeconomic
Policy Report
Name:
Mai Huynh Bao Han
ID number:
s3818233
Lecturer:
Pham Thi Thu Tra
Word Count:
1649 words
Fiscal Policy of Germany
Report
Table of Contents
Macroeconomic Snapshot
..................................................................................
2
Pre-COVID-19 period
....................................................................................
2
Post-COVID-19 period
...................................................................................
4
Fiscal Policy Analysis
..........................................................................................
5
Impact of Fiscal Policy
.......................................................................................
5
Conclusion
...........................................................................................................
7
Comparison and contrast between Vietnam and Germany
............................
7
PPP test
................................................................................................................
7
Challenges of a possible arbitrage
.....................................................................
8
Reflection
.............................................................................................................
8
Appendices
...........................................................................................................
9
References
..........................................................................................................
11
Macroeconomic Snapshot
Germany is situated in central Europe and claimed to be the second most populous nation.
The country has a great contribution to the economy since it is a foremost exporter, hence it
becomes Europe's largest and also the fifth-largest economy in the world (CIA n.d).
Pre-COVID-19 period
Growth rate
Figure 1. Growth rates (%) of Germany from 2009 to 2019 – Reproduced from World Bank
2020
(a)
.
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
-5.7
4.18
3.92
0.42
0.43
2.23
1.74
2.23
2.47
1.53
0.56
Table 1. Germany’s data of growth rates (%) from 2009 to 2019 – Reproduced from World
Bank 2020
(a)
.
Before having a stable growth in later years, the economic development of Germany had
undergone a significant fluctuation. Specifically, the growth rate touched the bottom in 2009
with -5.7% due to the collapse of world trade flows caused by the global financial recession
and Euro-crisis (Harari 2014). The rate dropped severely since Germany’s growth depended
mainly on export (Dauderstädt 2013). Subsequently, the country managed to recover the
growth strongly and sustainably. Especially, the recovery in 2010 and 2011 was significant as
ingenious corporatist working time management was applied.
Inflation rate
Figure 2. Inflation rates (%) of Germany from 2009 to 2019 – Reproduced from World Bank
2020
(b)
.
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
0.31
1.1
2.08
2.01
1.5
0.91
0.51
0.49
1.51
1.73
1.45
Table 2. Germany’s data of inflation rates (%) from 2009 to 2019 – Reproduced from World
Bank 2020
(b)
.
Inflation rates witnessed dramatic shifts in 2011 and 2017 as well as the five-year
continuously declining rate. In detail, supply-driven oil prices affect production costs and
aggregate demand, resulting in influencing inflation (Živkov et al 2018). Therefore, the
nation experienced the lowest percentage in 2009 and had a five-year low rate due to
stagnation in prices caused by the global recession. Particularly, falling energy costs such as
oil prices contributed significantly to keep the price down (DW 2009). Contrarily, the
inflation rate increased dramatically in 2011 and 2017 because of the notable increase in
energy prices (FRANKFURT 2012; RTTNews 2018).
Unemployment rate
Figure 3. Unemployment rates (%) of Germany from 2009 to 2019 – Reproduced from
World
Bank 2020
(c)
.
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
7.74
6.97
5.82
5.38
5.23
4.98
4.62
4.12
3.75
3.38
3.14
Table 3. Germany’s data of unemployment rates (%) from 2009 to 2019 – Reproduced from
World Bank 2020
(c)
.
The unemployment rate saw a decreasing trend in a 10-year period after peaked at 7.74% in
2009. As a result of the global crisis, Germany experienced a banking crisis and a steep fall in
demand for export sectors, suggesting many workers were terminated to work in recession
year (Aricò & Stein 2011, p.6-7). Subsequently, the rate had been down steadily and reached
3.14% in 2019. This success is the result of stricter monitoring activities, effective placement,
