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The German Economy

Essay by   •  March 8, 2011  •  415 Words (2 Pages)  •  1,178 Views

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At this time, it is very interesting to take a look at the economy of Germany. With the election if the chancellor only days away, it appears salvaging Germany's economy will be the deciding factor in who will win the election. It is a close race between the current chancellor, Gerhard Schroeder, and his opponent Angela Merkel.

After years of living in a suffering economy, the Germans are fed up with the situation and desperately want a change. Merkel would be Germany's first female chancellor and is likely to win the election as Schroeder's past inconsistencies haunt him.

Some of the main problems are its continued difficulties integrating the formerly communist East, unemployment continues to skyrocket and both the German consumer's demand and buying power are exceedingly low. Most foreign and German experts consider domestic structural problems to be the main cause of the recent slow-moving performance. The inflexible labor market and heavy bureaucratic regulations restrict any businesses and weigh down the process of beginning a new business. The unemployment rate has grown past the post war record of 5.2 million. This unemployment affects both the consumer's of Germany and their purchasing power.

Another problem with Germany is the still divided nation. After being unified, the nation still remains divided between the East and the West. The West has a decent growth rate and modest demand from consumers. On the other hand, the East still suffers from stagnant economic growth and an unemployment rate twice as high as the West. Many skilled laborers are also seeking work in the growing West causing productivity in the East to still lag.

On the brighter side, Germany still remains a leader in exports. These exports account for one-third of national output. Because of this, these exports remain the key element in German economic expansion. The main manufacturing industries are the

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