Presentation On

German economy

PRESENTED BY:

Rahul Singh Tiwari

Germany is the largest national economy in Europe, the fourth-largest by nominal GDP in the world, and fifth by GDP (PPP).

The country is a founding member of the European Union and the Euro zone.

Since the age of industrialisation and beyond, the country has been a driver, innovator, and beneficiary of an ever more globalised economy.

Capital - Berlin

Currency Euro (EUR)

In 2014 GDP (nominal) $3.915 trillion. $3.486 trillion. (2014 PPP)

GDP rank 4th (nominal) / 5th (PPP)

GDP growth 1.6% ( 2014)

Inflation (CPI) 0.5% (November 2014)

Unemployment 4.8% (January 2015)

Germany is the world's top location for trade fairs. Around two thirds of the world's leading trade fairs take place in Germany.

World’s 500 largest stock market listed companies measured by revenue, the Fortune Global 500, 37 are headquartered in Germany.

Many multinational companies like AUDI, BMW, SAP, Allianz, Robert Bosch, Adidas, Siemens, metro, Mercedes Benz, BASF belong from Germany.

The service sector contributes around 70% of the total GDP, industry 29.1%, and agriculture 0.9%.

service sector

Industry

Agriculture

Gross National Product in Germany increased to 749.74 EUR Billion in the fourth quarter of 2014 from 746.27 EUR Billion in the third quarter of 2014.

Gross National Product in Germany averaged 545.90 EUR Billion from 1991 until 2014

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jan. 12 jan. 13 jan. 14 jan. 15

GNP ( EUR bill.)

GNP ( EUR bill.)

Jan.12 Jan.13 Jan.14 Jan.15

675.06 676.6 712.1 749.74

(ECB) is the central bank for the euro zone (euro area, the countries which have adopted the euro)

One of the ECB’s important tasks is to set and implement European monetary policy. This includes the use of the interest rate tool. The main objective of the ECB is price stability, or an inflation level of maximum 2% for the Euro zone.

The main refinancing rate or minimum bid rate is the interest rate which banks do have to pay when they borrow money from the ECB. Banks do so when they are short on liquidities.

There is a strong response of interbank interest rates to changes in the ECB refinancing rate. This does imply that the ECB interest rate can be used as a tool to influence market interest rates.

The current European interest rate ECB (base rate) is 0.050 %

Monetary Policy Germany does not have its own money so they can not use their

own monetary policy. Germany has to abide by what the ECB (European Central Bank) says.

The ECB is expected to raise interest rates 1.5% by the end of this year.

Impacts This rising of interest rates will not effect only Germany, but all

the rest of the countries that are involved in the ECB. This can result in unstable prices, and alter many costs of living making it harder for citizens to get approved for loans on many things

It increases the cost of borrowing, increases mortgage income payments, increases incentive to save rather than to spend, rising interest rates affect both consumers and firms, and government debt interest payments increase.

Although, the article made it seem like 1.5% was not a lot for the ECB, and made it sound almost positive in a way.

In 2014, Germany cut 14 million Euros in taxes as agreed by the outgoing government coalition of Christian Democrats and Social Democrats.

In 2015, they are aiming to cut 24 million Euros in income taxes benefiting in particular low- and middle-income earners as well as families.

This represents an expansionary fiscal policy as Germany is decreasing taxes.

  

With expansionary policy comes the goal to close a recessionary gap, decrease unemployment, and stimulate the economy.

Reducing taxes creates an opportunity for the economy to adjust itself while government spending can create new jobs.

Consumer Price Index CPI in Germany increased to 106.50 Index Points in February of 2015 from 105.50 Index Points in January of 2015. Consumer Price Index CPI in Germany averaged 58.30 Index Points from 1950 until 2015.

Harmonized Index of Consumer Prices (is used to compare inflation within Europe)

The Harmonized Index of Consumer Prices (HICP) is produced by each European Union member state to help measure inflation and to guide the European Central Bank in formulating monetary policy. The HICP is also used as the basis of the European Index of Consumer Prices, which is weighted toward household expenditures.

Current German HICP is 0.958 % (February 2015 )

Wholesale price index refers to a mix of agricultural and industrial goods at various stages of production and distribution, including import duties.

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WPI

WPI

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Total forex reserve (USD bill.)

total forex reserve (USD bill.)

2010 2011 2013 2014

2159.77 2341.04 2488.56 2985.35

Foreign direct investment (FDI) is a key element in international economic integration. FDI creates direct, stable and long-lasting links between economies.

It encourages the transfer of technology and know-how between countries, and allows the host economy to promote.

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2010 2011 2012 2013

FDI (USD bill.)

FDI (USD bill.)

Germany is the third largest exporter in the world with $1.516 trillion exported in 2012. Exports account for more than one-third of national output. 2014.

Germany recorded the highest TRADE surplus in the world worth $285 billion, making it the biggest capital exporter globally.

France UK Netherland

USA Austria Italy India China Switzerland

10.2% 7% 6.9% 6.3% 5.6% 5.4% 5.2% 5.1% 4.7%

main export pateners

France

UK

Netherlands

USA

Austria

Italy

India

China

Switzerland

Imports in Germany increased to 74000 EUR Million in January of 2015 from 71200 EUR Million in December of 2014. Imports in Germany averaged 22084.66 EUR Million from 1950 until 2015, reaching an all time high of 81861.20 EUR Million in October of 2014.

Netherland

France China Belgium Italy India UK Austria Russia

14% 7.5% 6.7% 6.4% 5.5% 4.6% 4.6% 4.4% 4.4%

main import pateners

Netherlands

France

China

Belgium

Italy

India

UK

Austria

Russia

As of December 2012, Germany is India's fifth largest trading partner worldwide, and the largest trading partner within the European Union, with an impressive share of 21 per cent of the total trade between EU and India.

Germany export to India : Total export 7154.41 USD mill.(FY12)

Automobile products and components Machinery Electro technology Metal product followed by aircraft Measurement and control equipment Plastics and plastic product Chemicals and pharmaceuticals

Export

machinery

Electro-technology + EDP

chemical products

metal & metal product

optical & photographic

Rubber & garments

automobile

textiles

pepar & pepar product

pharmaceuticals

glass, stone, cement

others

As per year 2012 India export 3491.77 USD mill.

Textiles Chemicals Metal Food, beverages, Tobacco Electro-technology Machinery Leather & leather product Pharmaceuticals

Import

textiles

chemicals

metal

food, beverages.tobacco

electro-technology

machinery

leather & leather product

rubber & plastics

automobiles +ancillaries

pharmaceuticals

gems & jewellery

others

The European recession is part of the Great Recession, which began in the United States. The crisis spread to Europe rapidly and affected much of the region with several countries already in recession.

The Euro zone recession has been dated from the first quarter of 2008 to the second quarter of 2009.

In the Euro zone as a whole, industrial production fell 1.9 percent in May 2008.

European car sales fell 7.8 percent in May compared with a year earlier.

Retail sales fell by 0.6 percent in June from the May level and by 3.1 percent from June in the previous year.

In the second quarter, the Euro zone's economy was reported to have declined by 0.2 percent

Germany's industrial output was down 2.4 %

Orders have now fallen for six months in a row, the worst run since the early 1990s.

German retails sales fell 1.4 % in June more than any expectations.

The German economy declined by 0.5 %

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2000(30.1%) 2009(26.5%) 2015(29%)

German share of euro zone GDP

German share of euro zone GDP

Thank you