751-Sabar Institute Of Management, Tajpur - Gujarat Technological ...

2.2 Economic Factors
5th largest economy in the world in PPP terms and Europe's largest economy
Leading exporter of machinery, vehicles, chemicals, and household equipment making
Germany a highly competitive country
Innovation driven economy (WEF, 2012)
Macro economy still remains remarkably stable in the view of continued economic difficulties
in the Euro area
Reduction in the fiscal deficit (fulfills Maastricht criteria)
Germany benefited from low interest rates during sovereign debt crisis
Financing for companies very cheap due to low interest rates
Decreasing inflation rate to currently 2.0% (October 2012) (2.0% is the maximum level set by
ECB to ensure price stability)
GDP growth of 0.3% in Q2 2012 keeping the overall Euro area out of recession
Depreciation of Euro against major currencies facilitates exports
GDP per capita of 31.415,97 € (2011) indicating high purchasing power of consumers
Prudent economic policies especially regarding lowering of corporate tax rates
Spillover effects of European Sovereign Debt crisis weighing down on Germany’s economy
Rating agencies threaten to downgrade Germany (negative outlook according to Moody’s)
Low GDP growth compared to other developed countries outside Euro area
Germany GDP Growth Rate
The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in
value of the goods and services produced by an economy. Germany is the largest economy in
Europe. The German economy is heavily export-oriented. In fact, exports account for more than
one-third of national output. As a result, exports traditionally have been a key element in German
macroeconomic expansion, accounting for over half of the economic growth in recent years.
Germany is a strong advocate of closer European economic integration, and its economic and
commercial policies are increasingly determined within the European Union (EU).
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