The German Chancellor, Angela Merkel may be going through some political difficulties at the moment, but one thing is for sure. She has no need to lose sleep over her country’s financial matters as she has presided over a booming economy that ensures Germany remains the financial power-house of Europe.
The problem for Merkel obviously is not the economy, but her nuclear power advocacy. At the beginning of April 2011, Merkel’s Christian Democrats suffered an election defeat to the Greens in her traditional stronghold of Baden-Wuerttemberg after having passed through parliament a policy that favours nuclear energy. The election campaign was dominated by nuclear worries following Japan’s tsunami nuclear disaster in March.
The current-account balance sheet
Germany prides itself on a clean balance sheet with the current-account at a staggering US$ 178 billion figure compared to Britain’s US$ 56.1 billion deficit according to the global financial statement published by The Economist magazine on March 31.
Despite the global financial crisis that brought countries like Ireland, Greece and Portugal to their knees, Germany still manages to be the driving force for economic recovery in the euro zone, and the country’s export demand helped the economy recover from recession in the second quarter of 2009.
Germany’s export boon here to stay
Germany’s engineering industries sustain an export base that boosts the economy during difficult times. Brands such as Mercedes Benz, Audi, BMW and Siemens have helped Germany become one of the largest global exporters while also attracting new trading partners in the Far Eastern countries such as South Korea and Japan. The country’s economy is also helped by solar energy research and development, economists say. German households are increasingly investing in solar power
Over the years Germany’s export earnings continued to swell, affording the country the muscle to make a 22.4bn euro (£19bn) contribution to a bail-out plan for debt-ridden Greece in May 2010.
According to an Economy Watch report, in 2009 alone Germany exported US$ 1.187 trillion worth of goods and services.
“The country ranked 3rd in the world in exports and continues to prove its strength as the world top economy”, the report observed.
The genius of the German workforce that keeps the country going
The Economy Watch report also recognizes, among others, the country’s productive workforce as a contributing factor to trade, which it said amounted to 43.51 million people in 2009 with the manufacturing industries absorbing almost 30% of the working population.
The German economy as a result sprinted ahead of most European countries in 2010 with a GDP rise of 3.6% compared to the euro-wide growth of just 1.7 per cent Economy Watch say.
The Deutsche Börse Group reported at close of business on March 31, 2011 that in the past month alone, 150 billion euros were turned over on Xetra and on the floor of the Frankfurt Stock Exchange, an increase of 36% year-on-year.
It is clear though. The German economy is well and sound thanks to Angela Merkel’s fiscal policies. Why then have Germans turned their backs on her? The problem is nuclear. Merkel is a nuclear energy advocate while increasingly Germans are opting for green energy such as solar.
Sources
- "Trade, exchange rates, budget balances and interest rates" The Economist, March 31, 2011
- "Germany Trade, Germany Exports, Germany Imports" Economy Watch, March 28, 2011
- "Turnover on Xetra grows by 37 percent in March" Deutsche Börse Group, April 1, 2011
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