Germany

Basic Facts
 Population of 80.8 million
 66.6 Million by 2060
 5thlargest economy in the world
 Average Age – 46.1 years (One of the
oldest nations)
General Economy
 Expected to grow at 1.9% in 2015, 1%
compared to the rest of the EU
 Fell by 0.2% in the 2nd quarter of 2014
 Export-led model
 Rely on this
Governement
 Income tax rate 47.5%
 Corporate tax rate 15.8%
 44.7% of the GDP is Government
expenditure
Before the Euro Crisis
 Growth rate < 1%
 Large Government spending on
‘Modernization of East Germany’
 Large deficit, low fiscal spending
 Brought down to 3% (EU rules)
 High unemployment of 9.5%
GDP
 2014- $3,857,685 million (4th Highest in the
world)
 Per Capita
 $46,200 in 2014
 $43,903 in 2013
 4.9% increase
 Composition
 0.8% Agriculture
 30.1% Manufacturing
 69.1% Service
Aggregate Demand
 Consumption Increased – 1.7%
 Large Investments, leading to an ‘above
average level’
 Construction 1.8%
 BusinessExpectations rising
 Government Expenditure increased by 1.5%
 Exports Rising by 4.7%
 Imports Rising by 3.7%
 APL ($)

LRAS
AD1 AD2

P1

Y=Real
Y1 Y2 Output
Unemployment
 5.3% in 2015 (24 Year Low)
 Overall unemployment fell by 5.7%
 Long Term unemployment fell from 2.3% to
2.1% from Q2-Q3 in 2014
 Employement increased by 1.1%
Labor Market
 Demand for skilled labor is high
 Ageing population
 Nurses and Doctors required
 Documents and legalities
 Visas, Work Permit
 Information readily available
Current Policies
 Publicfunding for daycare
 Parental Allowance for 14 months
 2/3rd of your income
 €300-€1800
 Current Situation
Avg. Wage
Rate (€)
ADL2 ASL1
ADL1

P2

P1

No. of
Q1 Q2 Workers
Income Distribution
 Gap between the rich and poor increasing
 In 10 years
 Richest 10% see 28% increase
 Poorest 10% only see 15% increase
 More unevenly distributed compared to the
rest of the EU
 Gini Index 0.78
Inflation
 Currentlyat 1.6% (5 Year low)
 Expected to rise by 0.3%
 Postpone spending
 Prices for solid fuels increased by 2.3%
 Due to reduction in nuclear energy
 Food prices increased by 1.4%
 Goods fell by 0.3%, services up by 1.2%
 Oil prices fell by 50%
How Inflation is Calculated
 600 products part of the basket
 300,000 prices are collected every month
 Current Situation
APL (€)

AS1

P2
P1

AD2
AD1
O Y1 Y2 Y (Real Output)
 Expected Situation
APL (€)

AS

P1

P2

AD1

AD2
O Y2 Y1 Y (Real Output)
What Germany Plans On Doing
 Increase Govt. Expenditure
 Infrastructure
 Quality declining

 Increasing the wages

 Higher purchasing power

 Give tax incentives to private firms

Reasons for Deflation
 Earlierhigh unemployment
 Loss of consumer confidence
 Feared inflation
 ECB cut interest rates by 25 points,
deflation even lower
 Borrowing actually became expensive
Balance of Payment
 Trade surplus of €19174 million (February
2015)
 Euro is too weak for Germany
 Their costs are not as high- Manufacturing
 Contractionary Fiscal policies
 Reduces spending on Imports
 From 16.2 billion to 19.2 billion in just 1 year
 Exports increase by 3.9%
 Imports only rose by 0.8%
Bibliography
 http://ec.europa.eu/eurostat/web/national-accounts/data/main-
tables
 http://www.dw.com/en/german-unemployment-falls-to-historic-
low/a-18551130
 https://fsaraceno.wordpress.com/tag/aggregate-demand/
 http://countryeconomy.com/gdp/germany
 http://useconomy.about.com/od/worldeconomy/p/Germany.htm
 http://www.tradingeconomics.com/articles/11252014072504.ht
m
 http://www.economicshelp.org/blog/11448/stats/eu-inflation-
and-deflation/
 http://www.economist.com/news/europe/21633832-germanys-
economy-getting-too-weak-pull-europe-out-its-crisis-sputtering-
engine?zid=295&ah=0bca374e65f2354d553956ea65f756e0
Bibliography
 http://inequalitywatch.eu/spip.php?article114&lang=fr
 http://www.reuters.com/article/2014/02/26/us-
germany-wealth-idUSBREA1P1VJ20140226
 http://www.tradingeconomics.com/germany/wages
 http://www.expatica.com/de/employment/Work-in-
Germany-Jobs-in-Germany_102718.html
 http://www.tradingeconomics.com/germany/inflation-cpi
 http://www.bamf.de/EN/Willkommen/KinderFamilie/Elter
ngeld/elterngeld-node.html
 http://www.howtogermany.com/pages/parental_allowance.
html
 http://www.brookings.edu/blogs/ben-
bernanke/posts/2015/04/03-germany-trade-surplus-
problem
 https://www.gfmag.com/global-data/country-
data/germany-gdp-country-report