The Economy of Germany the Never stopping Economy

The Economy of Germany the Never stopping Economy

Economy of Germany

Germany’s economy comes under a highly developed social market economy. The nation has maintained the largest economy in Europe. 

According to a nominal gross domestic product, Germany’s economy has produced $4.2 trillion in 2019. Germany’s economy is the fourth-largest economy after the United States, China, and Japan. 

The nation flourished in its economy in the last 12 years. The chancellor of Germany, Angela Merkel, made the economic boost and maintained record low employment rates.

The Economic Growth of Germany- Past to Present
In 2017, Germany’s GDP growth rate was 2.4%, which was better than in 2016. In 2016, the GDP per capita was $45,923, which later improved to $46,749 in 2017. It is still less compared to the United States, where the people enjoy at $53,129. 

The growth rate of the economy of Germany was less than 1% before the 2008 financial crisis. It was due to the following reasons-

The cost of Modernization of Eastern Company was $70 billion per year, but after 2008, it slipped to $12 billion. 

The high unemployment rate of around 9.5% and the ageing population was the second factor making Germany’s economy sink. Almost 20% of the population aged 65+ during that time. It results in the depleting of Social Security funds faster than its collection via payroll taxes. 

Type of Economy
The country has a system of mixed economy. Germany allows a free market economy in various goods and services. To maintain economic growth, Germany has a command economy system. It provides equal benefits to each citizen by asking to pay more tax to those having higher incomes. 

On the other hand, the government provides benefits like health care insurance and a better education system. It simply means you pay according to your salary and enjoy the services according to your needs.

Government Finances
In 2010, the debt-to-GDP ratio of Germany was highest at 80.3%. But since then, it started to fall. In 2015, Germany’s gross government debt was around €2,152 billion, i.e., 71.9% of its GDP. 

However, in 2015 the federal government received a budget of surplus €12.1 billion. The credit rating system of the country got AAA, the highest possible rating, in 2016.

Several Factors in Boosting Economy of Germany
Germany’s achievements in science and technology are marvelous. The research and development centre plays a vital role in boosting Germany’s economy. 

The nation is also leading in developing and using green technologies. The companies working on it marked a turnover of around €200 billion. The country’s expertise in engineering, science, and research is remarkably respectable. 

Germany comes under the top 10 most visited countries. In 2012, the country welcomed nearly 68.83 million visitors. With this, Berlin became the third most visited city in Europe. 

If combined, the domestic and international tourism sector contributes over €43.2 billion to Germany GDP. All over, it provides jobs to 2 million people contributing 4.8% of the total employment. It organizes the largest trade fairs in cities like Hannover, Frankfurt, and Berlin. 

Germany is still struggling with the nation’s declining birthrate, which is the lowest in the world. This problem is frequent in areas of societies with higher education. The impact is, the number of workers will be reduced, and the government will need to spend more through pensions. 

According to the Federal Statistical Office reports on 25th August 2020, Germany’s economic growth slipped down by 9.7% in the second quarter of the year due to Covid 19. It was the worst record in the history of Germany.

The economy of Germany slipped at the fastest rate because of the impact of the coronavirus pandemic. The production of goods and services fell by 10.1% in April-June.

Germany is the leading exporter of manufactured goods; therefore, due to Covid 19, the country’s international trade system is now facing severe crises.

Germany’s economy was hit hard by the pandemic, and some restrictions are made to get it back on the right track. 

Expected Rebound 
The officials still believe that government consumption spending can lead to economic growth. It means non-investment spending by the public sector.

According to several data, the recovery of the economy started after April. For example, the industrial production and retail sales market have started gaining monthly figures. 

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