Even if the international financial crunch devastated Germany’s exporters, there are signs of optimism for the country’s economy and subsequent exchange traded fund (ETF).
Starting off with the bad news, Germany recently announced its biggest GDP drop as international demand plummeted and businesses were forced to cut back to cope with mounting loses, says Bret Neely for Marketplace.
Economists such as Irvwin Collier believe Germany did all the right things – the country’s combined $102 billion stimulus package shored up consumer confidence and led to slightly more consumption. But the type of economy in place, primarily an export-driven one, was very susceptible to international influences. Last year, exports amounted to $1.3 trillion, which is more than China.
As unemployment rises, the German populace is starting to question the export-based model and whether to continue with this 60-year-old model or change it up. Axel Weber, president of Germany’s Central Bank, has advised the need to switch to a service oriented industry and not stick to manufacturing. He also admits this won’t happen anytime soon.
Some business owners are not too worried about being overly dependent on exports since sales have already started to pick up. Older citizens that remembered the industry during World War II likens the current recession as a “hiccup.”
- iShares MSCI Germany Index (EWG): up 3.8% year-to-date
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.