Economic Environment of the Country

Neel Patel

BUA 3345

Meghan Wright

October 18, 2020

Economic Environment of the Country

Germany

Economic growth

Germany is said to be the world’s twenty-seventh major economies by holding the major growth rates throughout the recession and financial crisis. Germany remains the European Union’s most diplomatically and economically powerful member nation. The recorded economic growth rate or GDP rate of Germany in 2019 was about 0.57 percent that was a one percent increase from the previous fiscal year. The economy of Germany remains determined through the business sector or government spending, their economy takes advantage of the car manufacturing industry. In 2019, Germany’s GDP strained at about four billion universal dollars, the maximum GDP the country has informed in years. It is projected to grow in the direction of five billion by 2021. Germany has the fourth-largest GDP in the domain, afterward the United States, China, and Japan.

Inflation rates

The inflation rate is considered using the price growth of a definite product carrier. This product carrier comprises products and services, on which the usual customer spends money all over the year. The inflation rate of Germany was recorded at 1.35 percent in 2019 that was a 0.6 % decline from 2018, and the future forecasts show that the inflation rate to expected to drop to 1.03 percent in 2020 and will increase again in 2021 to 1.18 percent respectively. The highest recorded inflation rate in the history of German history is 5.05 percent in 1992 because of recession and financial crisis. In Germany, the inflation rates are the responsibility of the European Central Bank, Central investors like low, constant inflation since this is a symbol of a rising economy (Statista, 2020).

Unemployment policy

The employment rate in Germany dropped to 0.1 percent in July 2020 and become constant at 6.4 percent in August 2020. The percentage of underemployed individuals in Germany remained constant, about 2.2 million individuals Germans are underemployed. The unemployment rate in Germany was pretty low, it was recorded at 3.04 percent in 2019 and was still dropping. In comparison with the Federal Statistical Office, about 4.6 million Germans are currently underemployed, and the rate is still dropping due to the Coronavirus pandemic (Destatis, 2020). This administration also reported that the rate of unemployment was rising at a high rate and currently about 1.5 million Germans are unemployed. Youth employment Germany has proposed that the unemployment rate of Germany will be squeezed negatively due to the Coronavirus disease in 2020 but it is projected to rise by 7.0 percent in 2021 and drop to 6.0 percent in 2022.

Interest rates and monetary policies

The interest rates in Germany are the rate that is formulated by the European Central Bank every month. This rate is charged on loans taken from the banks or other financial institutions, and these rates significantly impact the price of any financial product. Currently, the interest rate in Germany is 0.52 percent that is considered high as compared to the previous interest rates in the German economy as in 2019 the interest rate was 0.30 percent, and in 2018 it was about 0.19 percent. The highest interest rate in the German interest rate history is recorded at 4.75 percent in 2000.

The European Central Bank of Germany is also responsible for framing and applying the monetary policy in the country, the Bundesbank’s core business area is monetary policy. The monetary policy of Germany includes the revision of interest on loans demanded by the financial banks in the fiscal market. Other rates in the German economy are inclined by interest rates or monetary policy. The monetary policies of Germany are designed for the stability of the currency, for maintenance of full employment, and the economic wealth and wellbeing of the individuals of Germany (Heritage, 2020).

References
Destatis. (2020). The unemployment rate in Germany. Short-term indicators. Retrieved from https://www.destatis.de/EN/Themes/Economy/Short-Term-Indicators/Labour-Market/arb210a.html

Heritage. (2020). Germany’s economic freedom. Retrieved from https://www.heritage.org/index/country/germany

Statista. (2020). Germany: Inflation rate from 1984 to 2021. Retrieved from https://www.statista.com/statistics/375207/inflation-rate-in-germany/