Tracking The World Economy... - 18/08/2010

Germany The Bright Spot In The Euroland Economy
The Euroland economy grew by 1.0% qoq or an annualised rate of around 4% in the 2Q, compared with +0.2% or an annualised rate of +0.8% in the 1Q. That was the fastest growth in four years, powered by Germany, which grew by 2.2% qoq in the 2Q, yielding an annualised rate of about 9% and puts it on the same footing with emerging markets
like China and India. To a large extent, exports are driving Germany’s economic recovery. As it stands, export sales accounted for 41% of German GDP in 2009, compared with 13% in Japan and 11% in the US, according to an estimate.
Germany’s strong export competitiveness has its roots in the country’s efforts to rebuild its economy through foreign trade after World War II. In the 1970s, when Germany’s post-war recovery had faded and unemployment increased, the country responded by cutting costs instead of building a stronger domestic services sector. Germany once again squeezed labour costs and boosted productivity when it adopted the euro in 1999, in a move to redress the competitive disadvantage its overvalued Mark had left it with after the reunification boom of the early 1990s.


Tracking The World Economy... - 18/08/2010