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Macroeconomic
Faisal al zaman
Assignment 2
ID: 201001792
Sic: 102
Introduction:
The gross domestic product (GDP) is one the primary indicators used to gauge the health of
a country's economy. It represents the total dollar value of all goods and services produced over a
specific time – you can think of it as the size of the economy. Usually, GDP is expressed as a
comparison to the previous quarter or year. For example, if the year-to-year is up 3%, this is thought
to mean that the economy has growth by 3% over the last year.
The German Economy in the Last 10 Years
The Gross Domestic Product (GDP) in Germany expanded 0.20 percent in the third quarter
of 2012 over the previous quarter. GDP Growth Rate in Germany is reported by the German
Federal Statistical Office. Historically, from 1991 until 2012, Germany GDP Growth Rate average
0.3 percent reaching an all time high of 2.1 percent in June 2012 and record low of -3.7 Percent in
March of 2009. Germany is the largest economy in Europe. The German economy is heavily
export-oriented. In fact, exports account for more than one-third of national output. As a result,
exports traditionally have been a key element in German macroeconomic expansion, accounting for
over half of the economic growth in recent years. Germany is a strong advocate of closer European
economic integration, and its economic and commercial policies are increasingly determined within
the European Union (EU).
Germany's economic freedom score is 71.0 making its economy the 26th freest in the 2012
Index. Its overall score has declined slightly because of deterioration in the management of
government spending. Germany is ranked 12th out of 43 countries in the Europe region and its
overall score is significantly higher than the world average.
However, an essay written by Gabi, indicates that the German economy is pushing the
nation into the worst recession in at least 12 years.
Gross domestic product dropped a seasonally 0.5 percent from the second quarter, when it fell 0.4
percent, the Federal Statistics Office in Wiebaden said today. Economists expected a 0.2 percent
decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last
contracted this much over two consecutive quarters. German companies are struggling with
dwindling export orders. Siemens AG, Europe's biggest engineering company, reported a profit
decline today and plans to cut 16,750 jobs by 2010. The Organization for Economic Cooperation
and Development lowered its global forecast for the second time, saying the economy of its
members will contract 0.3 percent in 2009 after growing 1.4 percent this year.
In Germany movements in GDP follow movements in the rate of expansion of experts. Let's
not go into why that is for the moment and just consider the possibility, despite all the talk over the
years of Germany finally "decoupling: that it can't. export dependence could well be the key
expansion for the performance of the German economy is so "extreme" and so volatile , with
quarters of record growth being witnesses just before the onset of substantial recessions, recessions
which often register record falls in output only to be followed by massive recoveries. The reality is
not that Germany is either a growth or a contraction champion , but that export dependency simply
makes the German economy more volatile and more susceptible to sudden changes than those of
some of its neighbors.
Germany is the world's fifth largest economy and the largest in Europe, accounting about
one-fifth of the European Union's GDP. Germany is also the largest European trade and investment
partner of the United States.
References:
1- Gabi Thesing, November 13,2008. The German Economy , from http:// bloomberg.com.
2- Germany, from http://heritage.org/country/Germany.
3- Toni Pierenkemper and Richard Tilly, The German Economy During the Nineteenth
Century, Berghahn Books, 2004.