What’s Going On With The German Economy?

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All over the world, the economy is big news. It’s no different in Germany… or is it?

Get a group of people sitting together in a beer garden discussing the state of the world and the economy is going to be a front and center topic. So what do you need to know? How should you react?

First, the need-to-know items. Some of them you have seen in the news, usually as a screaming headline. These include such fun statistics as:

  • “World Tourist Organization says European Tourism down 8%”
  • “German GDP Shrinks 3.8% in Q1 2009”
  • “German Exports Plunge More Than 9% Since 2008”

All of these items look bad on TV and allow the talking heads to look gravely concerned and talk in somber tones before switching over to sports and weather. But what is the true situation on the ground?

The reality is that for most people life is proceeding as normal. There is an added air of caution with major expenditures, but that is not so unusual. Germany has been through a number of ups and downs economically over the years and so caution is a natural part of the pattern.

Additionally, while things are slowing globally, the German economy is on an upswing overall. Yes, this quarter or even this year may not deliver outstanding growth of the kind the stockbrokers want. But, compared to past years things are still following a general uptrend.

For example, if you look back to the time when the Wall came down, unemployment rates were around 15%, especially in the North East of the country. Now, the national rates are 9.6%. This is an remarkable improvement, although American and British analysts react to the number with shock because they come from a different perspective. ;-)

Further, 72% of the German working age population works. By way of comparison, in the US, only 66% of the working age population works, even though they have a lower official unemployment rate.

So you see, numbers are still relative.

Thus, moving around and doing business in Germany you will still find a strong economy and bustling trade. You shouldn’t feel as though there is a major economic crisis about to end the world at any time. Instead, enjoy Germany’s fine infrastructure, well-ordered business life and beautiful scenery! :-)

—Marcus

One response to “What’s Going On With The German Economy?”

  1. Ames Tiedeman Avatar
    Ames Tiedeman

    Exports are driving the German economy. Here is the problem is the USA:

    “The United States of America has not had a trade surplus since 1975. We have not had a trade surplus with Japan since April, 1976. Every year since 1983 we have been in deficit with Europe. The last time America had a trade surplus with both Russia and China was a very brief period during the Cold War. We have been running ever increasing trade deficits with South Korea since 1998. Our 1993 trade surplus with Mexico is now a 100 billion a year trade deficit. In the 1970’s, 80’s, and much of the 1990’s our trade deficit was never more than one half of 1% of GDP. We now find ourselves with a trade deficit of between 5% and 7% of GDP depending on how you count. From 2002 to 2007 the trade deficit exploded. The only reason unemployment stayed well under 6% is because of the credit bubble. 63% of all jobs created from 2000 to 2006 were housing or credit bubble related. We did not feel the destructive affects of the trade deficit because of this credit bubble. I have concluded from work I have been doing that America will never get unemployment even under 7% with a trade deficit of over 3% of GDP, without a major credit bubble. The U.S. Economy has actually stopped functioning like a real economy. We literally need a credit bubble to function. America must move from the ideology of free trade to the economic policy of balanced trade. Until this structural shift takes place you can bank on the American economy being the laughing stock of the world economy.”
    -Ames F. Tiedeman

    Reply

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