Over the past several months, I’ve been following the roller coaster of a story that the German economy has become. However, today, I’ve got great news to report! Just days after the World Bank calls for quantitative easing in the Eurozone to end dangerous economic stagnation, Germany surprises everyone with an amazing growth report for 2014! Today, we’re going to take a close look at Germany’s growth and discuss what it means for the Eurozone as a whole.
The Shocking Data Showing Incredible Growth in Germany’s Economy
On Thursday, the Federal Statistics office in Berlin released a report that showed that by their estimates, the German economy grew by 1.5% in the year 2014. Considering the facts that in the year 2013, the German economy only increased by .1% and that the country hasn’t seen comparable growth since 2011, it’s easy to see why so many people are excited about this data.
Where Did The Growth Come From?
As with any other case of economic growth, several factors played key roles in the growth that Germany saw in 2014. Those factors include…
- Private Consumption – One of the biggest factors associated with the growth that Germany saw was private consumption. As a matter of fact, private consumption added 0.6% to the growth seen in the German economy as a whole.
- Unemployment Rates – Throughout much of the year of 2014, German unemployment rates fell. As a matter of fact, higher jobs figures lent a huge hand to the private consumption figures seen in Germany. As a matter of fact, Germany’s unemployment rate fell to 6.5% in December; which is the lowest rate the country has seen in more than 2 decades.
- Foreign Trade – Growth in foreign trade was a major surprise considering weak activity in Europe, the crisis in Ukraine, and turmoil in the Middle East. Despite the issues that have faced Germany’s foreign trade in 2014, the sector grew by 3.7% in the year 2014; contributing 0.4% to the growth that the country’s economy saw as a whole.
What Does This Mean for Germany’s Economy In 2015?
The positive growth displayed in the German economy throughout the year 2014 lends hope that 2015 will prove to be better than analysts predicted earlier. As the unemployment rate continues to fall, consumers will continue to spend more and more money because they have the ability to do so. The key to growth in 2015 is whether or not Germany will be able to continue showing increases in foreign trade and investments. If that does prove to be the case, Germany may just have another record breaking year in 2015.
What Does The News Mean For The Eurozone As A Whole?
While many people may look at this and because Germany is the Eurozone’s largest economy, think that this will be enough to pull the Eurozone out of economic stagnation. Personally, I disagree. The reality is that while Germany is the Eurozone’s largest economy, it is only one of many! With the vast majority of other countries in the Eurozone struggling to pick up economic pace, I’m not sure strong growth in Germany will give the Eurozone the kick it needs to bounce back. While it may provide a little help in shadowing the major issues that the Eurozone is faced with; at some point the ECB will have no choice but to combat the problem as a whole!
Final Thoughts
It’s incredibly exciting to see the economy in Germany picking up yet again. Although I don’t think the country is out of the woods just yet, I do believe that the strong growth is just another sign that shows the strength and resilience of the German culture. I’m planning for a great 2015! Thanks for reading, I’ll see you next week!
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