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Economics : The German Economy

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Economics
The German economy is the largest in Europe and worldwide Germany has the fifth largest economy (“World fact book”, n.d.). It is clear that the German economy holds a key position in the world marketplace. Gross domestic product (GDP) growth is an important consideration for foreign investment as it speaks to the overall health of an economy. GDP growth can be attributed to spending and investments both on and from imports and exports (“What is GDP”, 2005). In 2014 the reported GDP growth rate in Germany was 1.4%, up .9 % from the prior year (“World fact book” n.d.). The Eurozone was deeply affected by a recession stemming from the US and made worse by poor economic conditions in Greece and Spain, among other countries in
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In 2014 trade as share of GDP was 70.8 percent, down less than three percent from the two years prior (“Merchandise trade”, n.d.). This is one of those areas in which only time will tell whether Germany will continue to prosper and be the financial backbone of the Eurozone.
GDP per capita is also an important indicator of economic health. GDP per capita takes the total output of a country and divides it by the number of people in a countries population; this indicated the buying power of individuals. GDP per capita in Germany as reported for 2014 was slightly over 47,000 USD (“Countries with the largest”, n.d.). Looking at GDP per capita when compared to other countries in the Eurozone Germany is not fairing so well. Luxembourg leads the world wide GDP per capita and that of the Eurozone with a high rate of 116,750 USD (“Countries with the largest”, n.d.). Worldwide Germany ranks 16th in the Eurozone, Germany was beat out by Austria, Finland, Ireland, Luxembourg and the Netherlands in GDP per capita (“Countries with the largest”, n.d.). While the GDP per capita rate in Germany is stronger than many other countries it is not competitive with other countries which have economies comparable in size to Germany nor economies centrally located in the Eurozone.
A low inflation rate averaging .91 percent for 2014 should help to increase purchases in Germany. This is because consumers can get more for the
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