ABCDE
German Crisis and Criticality of Euro in itXavier Institute of Management, Bhubaneswar
Prashant Choudhary Anish Gupta
XIMB XIMBuh14080@stu.ximb.ac.in uh14057@stu.ximb.ac.in
German Crisis and criticality of Euro in it
Germany is the largest economy of the Euro zone and 5th largest GDP of the world. In 2013 when Greece and other Euro zone nations like Spain were taking a beating, Germany was getting praises for its resilience and dynamism. But now the picture is changing. Germany witnessed the dip in GDP for the second quarter reaching -0.6 %. At the same time European Union saw 0 % growth in this quarter which highlights that something is seriously wrong. If it will become a recession then this will be the third recession after 2008 which has been names as Triple Dip Recession. The investments have severely declined in Germany in recent years. It received 4th lowest investment among all European nations in 2013. German Economy which relies heavily on exports of motor vehicles, machinery and Chemicals has also seen a decline in demand. This forced the government to downgrade the growth forecast from 2% GDP growth to 1.2 % growth. The main reasons for this decline in exports are the strong euro currency and low inflation. Moreover the Ukraine Crisis and chaotic Middle East is also contributing to the cause. China’s slowdown and the impact of Russian sanctions have also hurt the German economy as China alone imports German goods worth 67 billion euro every year.
Role of Euro in Crisis
According to the analysis by many analysts, the European Debt Crisis’s main cause was the wild fiscal extravagant spending by non-core countries on expansion in welfare state model and rising public sector wages. The main reason for this spending was low interest rates and strong euro. So Euro was directly and indirectly involved in triggering the crisis.
Fully integrated
Prashant Choudhary Anish Gupta
XIMB XIMBuh14080@stu.ximb.ac.in uh14057@stu.ximb.ac.in
German Crisis and criticality of Euro in it
Germany is the largest economy of the Euro zone and 5th largest GDP of the world. In 2013 when Greece and other Euro zone nations like Spain were taking a beating, Germany was getting praises for its resilience and dynamism. But now the picture is changing. Germany witnessed the dip in GDP for the second quarter reaching -0.6 %. At the same time European Union saw 0 % growth in this quarter which highlights that something is seriously wrong. If it will become a recession then this will be the third recession after 2008 which has been names as Triple Dip Recession. The investments have severely declined in Germany in recent years. It received 4th lowest investment among all European nations in 2013. German Economy which relies heavily on exports of motor vehicles, machinery and Chemicals has also seen a decline in demand. This forced the government to downgrade the growth forecast from 2% GDP growth to 1.2 % growth. The main reasons for this decline in exports are the strong euro currency and low inflation. Moreover the Ukraine Crisis and chaotic Middle East is also contributing to the cause. China’s slowdown and the impact of Russian sanctions have also hurt the German economy as China alone imports German goods worth 67 billion euro every year.
Role of Euro in Crisis
According to the analysis by many analysts, the European Debt Crisis’s main cause was the wild fiscal extravagant spending by non-core countries on expansion in welfare state model and rising public sector wages. The main reason for this spending was low interest rates and strong euro. So Euro was directly and indirectly involved in triggering the crisis.
Fully integrated
References: 1.World Bank (data.worldbank.org) 2. Bank for International Settlements (http://www.bis.org/)