Therefore, the German export industry will suffer in the short run unless the situation is reverses. Within the Euro economy, as the money market goes up, the German prices also follow suit. Thus, the sentiment that Germany was hoping to gain economically from the weaker nations economy did not come to be. Germany’s only home is for the DM to depreciate and this would definitely bring back the economy. The German interest rates have also taken a toll from the effects of the Euro. This has resulted in the delay of Germany getting out of the recession from 2006 to date.
As such, Germany has been performing below the EU pact that counties must maintain not less than 3% GDP deficit. The current German Situation is that they are liable for a fine which if imposed would see them have detrimental effects on the economy. (Mach , “ The Euro Leads Europe into Economic problems. ”) Analytics Chart 1, GDP: The GDP from the US was in 70’s about 2. 5 times higher than the GDP from Germany; in the time to 2007 the factor grew to over 5. 7. This means that the US growth rate was by far larger than the German growth rate over the last 30 years.
Chart 2, GDP Change: Since 2004 the incremental change of the GDP in the US is negative while the incremental change of the GDP in Germany is positive. This phenomenon can be observed the first time since 1970. Chart 3, Import of Goods: In the years from 1955 to 1973, the Import of Goods between US (approx. 1. 1 Billion USD) and Germany (approx. 0. 63 Billion USD) were equivalent in the absolute numbers. This changed since the mid 70’s when the US increased the import with a significant higher rate than Germany.
In 2007 the Import of Goods of the US were approx. 162.7 Billion USD compared to Germany approx. 88. 1 Billion USD. Chart 4, Export of Goods: In the years from 1957 to 1994 the Exports of Goods between US and Germany were equivalent (35 to 42 Billion USD). In the years 1994 and 2001 the US (65 Billion USD in Year 2000) exported significant more than Germany (46 Billion USD in Year 2000). Since 2002 Germany (110 Billion USD) exports actually more than the US (96 Billion USD). Chart 5: Trade balance of Goods In the years of 1961 to 1970 the Trade Balance of Goods were for both counties equivalent an slightly positive by means it was more exported than imported.
Since 1971 to 1991 the trends differed while the German trade balance was more positive and the US trade balance changed to more negative numbers. From 1991 to 2007, this trend accelerated significantly and the German Trade balance is very positive in 2007 (approx. 200 Billion USD) while the US trade balance is extremely negative in 2007 (approx. 88 Billion USD). Chart 6; Trade balance of Manufacturing Goods: The trends for manufacturing goods in Chart 6 are correlating to the trend of Chart 5 for both countries.
Since 2000, the export on manufacturing goods from Germany was much higher than the import of manufacturing goods. In the US the export of manufacturing goods is much lower than the import of manufacturing goods. Chart 7: Production Manufacturing Index In both countries the production for manufacturing goods increased by factor six from 1955 to present. The economic cycles for example the world recession in the early 70’s are visible with a negative turn in the tend curves Chart 8: Change Production Manufacturing Index from previous years
The US economy shows much higher reaction to economic cycles than the German economy. For example, the change of the index from 1971 to 1975 is with -22% points in the US much higher than the change for Germany with – 14% points. The trend of both curves for the time since 2005 is remarkable. The US production index is falling since 2005 while the German Index is increasing. This correlates to Chart 2 with the GDP’s in this time period and can be observed the first time since 1955. Chart 9: Consumer Price Index for Germany and US
The consumer prices increased in both countries by factor six in the time period from 1955 to present. Chart 10: Change of Consumer Price Index for Germany and US the trend curves for the changes of Consumer Price Index are in correlation over the period from 1955 to present. Remarkable are the price changes in the US in the years from 1976 to 1979 when the prices increased between 8% and 14% every year. Noticeable is that there was almost no consumer pricing change in the German economy between 1985 and 1986. Apply a framework (for example 7S’s) to discuss the present situation for US and Germany Notes.
Germany Country Studies. “Industry.” Retrieved from www.country-studies.com/germany/industry.html.