Made In Germany

By: Andrew Davis

Produced & Edited by: Megan Laird

Germany’s recent recession is more complex than investors believe

Germany's flag waves over Berlin's Bundestage.  © Andrew Davis

It seems that the European Union is still in for some economic woes.  Even with the historic referendum failing to make Scotland an independent nation, other minority groups are calling for their own independence.

Now the EU faces the threat of dissolving, creating a disastrous effect for all countries currently holding memberships.  And at the center of the EU economy is Germany, which faces the most to lose.

And while many economists say Germany is on its way out as the powerhouse of the Eurozone, Germans aren’t as worried.

An employee for BMW, one of Germany’s biggest international companies, and he doesn’t think that Germany will lose influence anytime soon.

“I don’t know if BMW as a company is worried…for myself I don’t see the power decreasing, more the opposite the case.” they said.

Europe's Piggybank

After helping to bail out fellow EU member Greece, many investors in Frankfurt are being told to default on their loans. Germany, which boasts the fifth largest economy in the world, may be facing more troubles if other groups are successful in achieving their independence.

An Euro sign is lit up in Germany's financial hub
Frankfurt. © Andrew Davis

Germany’s economy features some of the most advanced production of steel, iron, and copper in the world.  But with its revenue reaching over two trillion dollars, it is easy to see why Germany is helping out its fellow EU members. But this is the leading cause to Germany having the fourth largest debt in the world.

Loans to other countries account for about 0.7% of Germany’s GDP.  And after bailing out several EU member nations, there are rumors that Germany is about to lose its spot as the leader of the EU economy.  Many loans have already been defaulted on and investors are being told not to expect their money back.

But with small regions now demanding their independence, the EU is looking at a bigger problem.  Germany is involved with the Eurozone meaning they, like the 17 other member nations, use the Euro as their currency.

With Ireland, Portugal, and Greece now having to default on loans, loans given out by Germany and other European countries, it drags the value of the Euro down.  Germany is already seeing a 2.1 rate of inflation, even though they are still one of the most powerful economies in the world.

Though with Germany’s Economy stalling, new measures are being taken.  Chancellor Angela Merkel announced that they will be using government spending in order to stimulate growth.  A tactic that many other countries are looking to as a leading example.

But many German citizens see this as a necessary action for their country to take. Another BMW worker says a popular phrase among Germany’s working class is the wages are too much to die but too little to live.

“Supporting countries, where people can retire with the age of 60 and having special rules is difficult to understand, why we have to work so hard for their support…

This is the view of quite a lot of people, but those that studied economics know, that it is a complex structure and that it is difficult to lead them being bankrupt.” They said.

“Germany is an export country and Europe is very important for our economy. Therefore it is difficult not to support the others, because this could mean a weaker economy for us as well.”

Eurozone Worries

All these problems in the Eurozone are leading to the largest slump in exports since 2009.  Which as an “export country” could mean more trouble down the road. Right now, Germany reported that their exports have slumped to just under six percent for the month of August compared to July. This has gotten to the point where American investors are starting to get worried.

However, German student Juli Schwartz says that exports are still what makes the fuels the German economy.

A luxury car is being assembled in BMW's plant outside of
Leipzig. © Andrew Davis

“The fact that "made in Germany" is still a sign for quality especially when it comes to cars but also engineering in general.” She said,  “German companies are known for a lot of technical know how. That’s the reason they get a lot of big projects like the Galileo project for the European space agency.”

There is still optimism for the current Euro crisis.  Many are calling for keeping exports high to keep investor confidence.  The employee says that not only should Germany be maintaining good relations with the countries they trade with, (the United States being one of the biggest ones) but also making sure the countries they support are able to support themselves in the long run.

To assume that the Germans hastily bailed out their fellow Eurozone members is incorrect.  The German government knew what they had to do in order to keep the EU together, the second largest economy in the world.  And the German people understand the importance of balancing Germany economic needs with the rest of the continent.

“As a citizen, I do support the actions until a certain point. Within the European Union the countries should support each other (where possible) to have a strong common economy.” Said the first employee.