Introduction
The changing economic situation and global trends often impact the European economies and Germany is not exempted. Germany has asserted its authority as one of the global economic powers with reduced cases of unemployment and growing economy. In the past decade, German took major steps towards changing the labor market in what turned to be labor reforms. The radical labor market alterations have since yielded the lowest form of unemployment. Economic growth remains critical to every nation’s progress. While economic growth determines the living standards of every member of the nation, the contribution of the citizens towards nation building. The long-term unemployed citizens had their benefits cut by margins to help boost the economic stability. In what seemed like a major economic shake off, the Germany’s economic state has become stable in the past few years as unemployment has equally reduced significantly thus making the desired progress of the economy a reality (Bundesbank, 2015, 1-20). There are several aspects of the economy that makes it necessary to have right structures in place to help boost the economy. However, a European economic giant like Germany has its economy determined by the global changes in the economy. In this regard, the must be thorough control of banking sector and the credit system that will ensure highly qualified corporate and individual segments are offered loans that can be recovered in case of any default. In the view of the economic achievements of the Central Bank of Germany as well the Government, certain aspects of the development are taken into consideration. These include;
Unemployment
The economy provided a solid performance in 2015, and the trend continued to 2016 in which the economy overall maintained a robust footing. Concerning the situation, January recorded new figures in the industrial production through expansion thus indicating fair robustness in the first quarter. It is essential for the government to ensure that the labor market progresses and maximizes on the global available skilled workforce to help spur economic growth. The refugee’s crisis that has hit the world remains a major concern to the European nations that find it hard to cope with the influx refugee population. Many of the refugees could lead to massive unemployment due to their lack of specific skills as well as limited lingual capabilities thus making them incapable of engaging in serious nation building (Bundesbank, 2015, 1-20). The handling of the refugees thus remains a critical concern to the government, and as witnessed in the March local primaries, it was evident that there were attempts to protest against the handling of the refugees with the anti-refugees. Despite the promising situation, January recorded contractions that meant caution should be taken to remain strong in the economic sector. The unemployment remains less than 4.3% in 2016. By the end of 2014, the unemployment rate was standing at 5.0%. Also, there was a reduction in the unemployment rates at 1.1% with an increased employment rate of 0.2% between January and February. Between February 2015 and 2016, there have been reduced unemployment rates at 10% from the initial projection of 2.01 million people. On the other hand, the employment rates increased by 1.5% from the past two years in which it stood at 39.9 million people thus making it the highest number ever since the unification (Bundesbank, 2015, 1-20). The statistics clearly indicates how the government has been able to hang on firmly on the economic situation of the country despite the tirade economic situation across Europe and the global crisis. In the past two years, there has been the steady reduction in the unemployment rates in Germany with a significant rise in employment. It indicates the commitment by the government through resilient financial policies to help cub deficits and stabilize the financial sector. It has thus kept the public spending under the radar of the financial authorities like Central Bank.
Economic growth
The country’s economy has been able to weather economic uncertainty across Europe and the changing economic situations for several years thereby remaining one of the top and strongest economies in the world. The projected economic growth maintains the continued strengthening in the year 2016 from the impressive figures of 2014 and 2015 (Goldbach & Nitsch, 2014, 883-91). It is due to the robust nature of the labor market, reduced interest rates and controlled financial practices which have also enable the financial sector to remain stable over the past years. The recovery of the business investment is anticipated due to the growing capacity utilization. Also, the expansionary budget remains critical to flexible spending priorities thus making it able to promote inclusive growth. It will also enable the government to accommodate as well as facilitate the growing immigrant population (Goldbach & Nitsch, 2014, 883-91). Over the past two years, the labor market has tightened more; the business climate has also improved, real wages are also rising in a strong manner. The GDP has grown by 1.7% in 2015 compared to the 1.6% in 2014. The average 2.0% annual growth in the past five years has been steady due to increased economic freedom in the country. The domestic demand and private spending also increased strongly over the course of two years. It raised the annual GDP per capita to 39717.70 from the previous 39208.76 in 2014.
Prices
The commodity prices have decreased steadily over the past two years as key commodities like fuel have recorded low prices in the period. As witnessed in the energy sector, the energy consumption price index has slumped significantly thus leading to zero inflation. The residential construction prices remain at 1.7% plus and 1.9% for the non-residential in the two-year period. The construction of roads thus increased with 0.5% 2014 and 2015 February (Ma & Mccauley, 2014, 1-29). The input prices have often fallen substantially in the wake of the economic recession. It has prompted low interests rates, low raw materials and energy prices, as well as salary cuts over the years, has been helpful in helping exert downward pressure to the inflation.
Balance of Payment
The current account balance increased hugely to 220 billion euros in 2014 thus representing the highest record in the post-war era. It recorded 7.5% GDP turnover as a result. The net revenue from foreign investment thus remains one of the strong current account earners for many years (Megas 2015, 17-33). The surplus of the current account hence exceeded the 6% set threshold. The exports increased moderately in 2014 and 2015 at 1.5% due to economic sanctions on Russia that is contracted to nearly 1/5 of the exports (Mogilenko & Pavlyuchenko, 2015, 25-34). However, it recorded increase in export in all the goods categories. From agricultural foods to capital goods, the exports recorded high increases. The demands for inputs also increased tremendously. In 2014, there were net capital exports that were considered high in comparison to the competing interests. The investment in indirect securities also increased via foreign investment funds thereby resulting to net outflows of about 38.5 billion euros.
Conclusion
As evident in the study, the government has been important in ensuring the economic stability in the volatile European market. Through proper implementation of the reforms and financial control, the Central Bank and the government has been able to create economic stability. As witnessed in 2015, the effects of volatility in the Chinese markets and economy resulted in slowing economic growth across the major European economies including Germany and England. It is critical for the government and the economic authorities within the country to put measures in place that will ensure that the economy survives major economic tides like the 2008 crisis that nearly tore apart European and American economies.
Bibliography
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