👉Germany Economic Report : How Germany became Europe's Engine ?

The economy of Germany is a highly developed social market economy. It is the largest national economy in Europe, the fourth-largest by nominal GDP in the world. In this video, we will analyze the secrets of the German economic strength. And try to understand, why is the German economy so powerful, and what lessons can the rest of the world learn from it?. #1. Euro bliss. There is no doubt that Germany has benefited greatly from the euro. Few other reasons are. Rising german exports are cheaper for overseas consumers. Relatively low levels of private debt. Real interests remain stable. Germans are uncomfortable with the concept of borrowing money. Germany is among the few economies maintaining a balance of payments surplus. #2. Labor reforms. Germany embarked upon a program of fundamental labor market reform in 2003, sparked by the excesses of post-unification wage increases. The reforms laid the foundation for a stable and flexible labor market. While unemployment across Europe and the US soared during the global downturn, remarkably, the jobless number in Germany barely flickered. Germany maintains a culture of business owners acknowledging and rewarding the efforts of the workforce, which develops harmony in the workplace and builds a degree of trust between the employer and employees. #3. Job skills. More important still to Germany's industrial strength is the country's education system. Apprentices aged 15 to 16 spend more time in the workplace receiving on-the-job training than they do in school, and after three to four years are almost guaranteed a full-time job. And in Germany, there is less stigma attached to vocational training and technical colleges than in many countries. Welcome to The Atlantis Report. Uncertainty over Brexit and the trade war between the US and China slowed down the export-oriented German economy. Nevertheless, Germany is still Europe's biggest economy and one of the world's most powerful economies. Germany is one of the largest global exporters of goods and services. So How did Germany become such a strong economy? There are several contributing factors. The Marshall Plan, after the war, helped to rebuild the economy and to create a large industrial infrastructure. German culture is very disciplined, and people are prone to be organized into productive teams. The educational system is world-class. The geography is very amenable to economic development, with a good network of waterways, large plains, and good ports. Germany is at the center of Europe, which makes it easy for it to trade with France, Scandinavia, the Baltic states, Poland, the Czech Republic, Slovakia, Hungary, Austria, and Italy. Germany is part of the European Single Market, with free access to over half a billion consumers. The Eurozone architecture was created as a replica of the Deutsche Mark, and thus it is very tuned to the needs of Germany. German Labor Unions are very strong, but they have a very constructive attitude in negotiating with employers. Main factors that were behind the development of the German economy were: highly qualified labor force. Extensively developed infrastructure. Large capital stock. Low level of corruption. High level of innovation. Let's take a detailed look at why Germany is the strongest economy in Europe. Germany exports goods and services worth over $1450 Billion US Dollars, which makes it one of the largest global exporter. In 2016, Germany recorded the highest trade surplus in the world . Audi, BMW, Benz, etc. are some of the very popular German Brands that are well known across the World. Germany's current account surplus remained the world's largest last year despite trade tensions, the Ifo economic institute said on Monday, in an estimate likely to renew criticism of Chancellor Angela Merkel's fiscal policies. The Ifo calculations, reported exclusively by Reuters ahead of publication by the economic institute, put Germany's current account surplus -- which measures the flow of goods, services and investments -- at some $293 billion in 2019. It is the fourth successive year that Germany's current account surplus has been the world's largest, with Japan's the next biggest at $194 billion, according to Ifo calculations. Germany is one of the largest exporters of vehicles, machinery, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, and rubber and plastics. Germany is rich in timber, lignite, potash, and salt. Germany is the leading producer of wind turbines in the world, and it is the first major industrialized nation to commit to the renewable energy transition. Agriculture, which comprises only 0.9% of German GDP, is extremely productive, and Germany is able to cover 90% of its nutritional needs with domestic production. Germany is the third-largest agricultural producer in the European Union after France and Italy. Germany's principal agricultural products are potatoes, wheat, barley, sugar beets, fruit, and cabbages. Despite the country's high level of industrialization, almost one-third of its territory is covered by forest. The forestry industry provides for about two-thirds of domestic consumption of wood and wood products. Industry and construction accounted for 30% of the gross domestic product and employed around 24% of the German workforce. Germany excels in the production of automobiles, machinery, electrical equipment, and chemicals. With the manufacture of 5.2 million vehicles in 2019, Germany was the world's fourth-largest producer and largest exporter of automobiles. German automotive companies enjoy an extremely strong position in the so-called premium segment, with a combined world market share of about 90%. Germany is also one of the biggest arms exporters that is not a permanent member of the United Nations security council. Small- to medium-sized manufacturing firms specialize in technologically advanced niche products. These firms form a major part of the German Economy. Germany is the seventh most visited country in the world and has a very big tourism industry. In 2019, around 37.50 million international tourists arrived in Germany, and Berlin became the third most visited city in Europe. Domestic and international travel and tourism combined directly contribute over EUR43.2 billion to German GDP. Including indirect and induced impacts, the industry contributes 4.5% of German GDP and supports 2 million jobs. Germany has dense and modern transportation networks. With its central position in Europe, Germany is an important transportation hub. The Autobahn motorway network that ranks worldwide third largest in its total length and features a lack of blanket speed limits on the majority of routes. Frankfurt airport acts as one of the biggest global hubs for connecting flights. Germany is one of the leading countries in developing and using green technologies. Companies specializing in green technology have an estimated turnover of €200 Billion. Germany has a skilled labor force with expertise in engineering, science, and research. The lead markets of Germany's green technology industry are power generation, sustainable mobility, material efficiency, energy efficiency, waste management and recycling, sustainable water management. All these factors make the German economy such a Strong Economy. Nevertheless, Germany has something even more important than all of that, and that is that it is the world’s ultimate factory. Germany is one of the founding partner states of the European Union and has played an influential role in ranking up the continent´s success on the global map. It is not only the largest economy but also the biggest foreign aid provider for European nations and significantly for the world too. Single-handedly, the German economy has played an important role in the European continent and saved it from going into a deep recession. Frau Angela Merkel, as the Chancellor, has some exponential credit to this fact. Some factors that contribute to it becoming the largest economy would be as follows. The manufacturing prowess of Germany. Small Scale Businesses are the backbone of the economy, which are largely family-owned and routed deep down. The highly impressive education system with public universities that produce skilled workers, and therefore many Germans do not leave the country for pursuing higher education. Vocational training and Technical Schools have almost the same value as that of a University degree, every job, and educational training and degree are viewed with due respect, thereby leaving a huge option and choice for the employers to hire. Even without a university degree, it is possible to get a management rank based on your knowledge and wisdom. Apprenticeship starts at the age of 15 -16, so the teenagers are roped into serving the economy and the country at a tender age. The built-up for achieving is instilled at an early age, so the people are hard-working and sincere to their job. Accepting the Euro as compared to Deutsche Mark earlier has given German exports a boost. Following this, Germany has a balance of payments into surplus, and competing with southern European economies has been easier due to the acceptance of the Euro. To precisely answer when was German economy powerful, it would be with the acceptance of the Euro itself because earlier in the past the other European economies have accepted cheap credit in the 1990s and 2000s, but the German companies were conservative in their spending and did not get into much of private debt. There is not much inflation in Germany as compared to other European nations. Also, German Industries are self-sustained. They detest borrowing, only in “real” emergencies they will turn to borrow. Therefore low debt has helped the economy be stable. All German automobile companies are having great demand from all over the world among rich individuals. A country which is exporting such luxurious cars all over the world, obviously its economy, will be good. Transparency international put Germany on 10th rank in corruption perception index with Denmark topping the position. It means Germany is the least corrupt. German Education System: German Education system is a conveyor belt of a highly skilled person. In Germany, school finishes before lunch, and students at the age of 15–16 in upper secondary spend more time in the workplace receiving the on-job training than they do in school and after 3 to 4 years are guaranteed full job. In Germany, education is free not only for its citizens but also for international citizens. Germany is a country where people work less but work efficiently. Germany once was a great military power and cause of both World War I and World War II. Now it has shifted its focus on economic development and social development rather than military development. Germany adopted the Euro Currency rather than its own currency due to which currency value was lower, and it helped Germany in export at a lower price. Labor Reforms. In 2003, the German government did the labor reforms, which strengthened the protection of employees. German machines are always reliable, and hence there is more demand all over the world. Germany has almost all the resources which it needs for economic development like timber, coal, natural gas, uranium, and iron ore. So companies don't need to spend on importing these products. The German economy has been over performing for the better part of the last decade, and the main reason for that is simply that it is a part of the EU. Confused? All countries that are a part of the EU forgo two things: firstly, a floating exchange rate, and secondly, their autonomy over monetary policy (central banks being able to set their own interest rates for each country). I will start with the second point. Central banks across the world use interest rates to manage rates of economic growth. Lower interest rates make it easier to borrow and have a stimulatory effect on the economy as a whole. Businesses are eager to invest because money is cheap, and through a series of knock-on effects, we see the economy prosper. Higher rates do the exact opposite. The thing with the EU is though that one central bank, the ECB sets interest rates for the entire set of member states. So, essentially, what happens is there is an average rate set for the entire EU, which tries to cater for economies that are struggling, like Greece and Italy, but also keep a cap on inflation in economies doing well, like Germany. The result is that Germany continues seeing stimulatory effects because the cash rate is not as high as it should be for their stage in the business cycle, and therefore they are able to capitalize on undervalued money for the investment they usually would not be able to undertake. Countries like Greece, on the other hand, lose out because their interest rates are much higher than they should be. The fixed exchange rate exacerbates this issue. Germany, due to the relative strength of its economy, should have a higher currency on the foreign exchange market than other struggling economies in the Euro. However, due to the fixed currency, countries like Italy are forced to import goods from Germany at a 1:1 exchange rate, as they are cheaper, stifling domestic producers and instead puffing German export incomes. If the exchange rates were floated, however, Italy’s exchange rate would be much lower, which would discourage the imports by making them more expensive, and help domestic Italian producers recover, while simultaneously reducing Germany’s competitiveness in that market, and export income in general. In essence, Germany gets a competitive advantage simply because of the way things are in the EU, as it receives the benefit of a relatively undervalued exchange rate and consistently stimulatory monetary policy from the ECB. The result is higher export incomes and investment, which significantly boosts the German economy, but as some economists have observed, at a cost to its European peers. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.
















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