The German economy – it’s not all over!

“They think it’s all over” is a well known quotation from Kenneth Wolstenholme’s BBC TV commentary in the closing moments of the 1966 FIFA World Cup Final, where England beat West Germany 4–2 after extra time. But it’s not all over for the German economy. Some interesting facts from The Economist on the economy as compared with its G7 colleagues.

* Highest growth of GDP/Capita among the G7 countries
* 6.6% unemployment – second-lowest
* Smallest budget deficit and least government debt relative to GDP
* Current account surplus which is 5% of GDP
* Household debt 99% of disposable income. UK – 170% USA – 128%

Although there are major budgetary issues in EU countries this has impacted on the value of the euro. With a falling euro this makes euro country exports more competitive and Germany has definitely benefitted from this. However, to rely on exports as the engine room of your economy is risky as recessions overseas can quickly revoke any growth. Last year domestic demand did increase and unemployment was the lowest rate for nearly 20 years. This could could put pressure on wages which may mean greater domestic spending.

2 thoughts on “The German economy – it’s not all over!

  1. Robin Watkins

    I was shocked recently when an Economist in New Zealand told me that the NZ government had only recently employed Economists to advise them. In the last 2 years. He said there was resistance in New Zealand to step outside the commodity box ( agriculture). A kind of naivety that NZ could continue to export agricultural products forever. And why wasn’t NZ developing a domestic economy? I am foreign and been living here for nearly 2 years. This is a great country and it has so much potential. I an not being sarcastic! NZ needs to be aware what is going on out there in the world and particularly demand an end to monopolies in Retail and the price of fuel. It needs to prepare in terms of population projections and infrastructure. To stop copying the mistakes of countries like the UK, eg. PPP Projects. It needs to intellectually develop ITS own unique way just like Brazil is doing and move forward in the 21st Century. Lets start by investing more in all levels of education. The young people are the future of this country.

    Reply
    1. Mark Post author

      Good comment. I would hope that Bill English would use the advice from Treasury, NZIER and Alan Bollard at the Reserve Bank. You are right, we need to diversify which means big government investment in innovation education and the likes – see previous post. Also there is the possibility of the resource curse issue – relying too much on commodity exports. We need to be more open-minded. Thanks for your comment.

      Reply

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