The world economy is going through a very difficult period. The global economic crisis which began in the USA with the collapse of the sub-prime mortgage market, spread to the rest of the world. After the US, Europe was the first to experience the negative impact of the crisis. This paper examines the impact of the global economic crisis on the German economy. It analysis the macroeconomic effects of the crisis, and especially its impact on the gross domestic product (GDP), the exports, the private consumption and the employment. The course work also provides an assessment of the microeconomic effects of the crisis in the construction sector in Germany. It provides a special report about the current condition of Strabag AG – one of the leading companies in the construction industry in the country. The paper also analyzes the common policy of the European Union and the particular measures taken by the German government in order to achieve economic growth in upcoming years.
Tags: Economic collapse in Germany, Economic crisis in Germany , Economic depression in Germany, German financial crisis
[...] On the whole, German economy fell into recession (Ifo economic forecast 2009: German economy in recession, 2008) Macroeconomic effects of the crisis in Germany. Some European countries like Ireland, Spain and the United Kingdom were the first to suffer the domino effect of the mortgage crisis which began in the USA. However, Germany was at first slightly affected due to its international trade connections. The growth in 2008 continued because of the orders companies had done in the previous year. [...]
[...] The usage of short-time work scheme cushioned the influence of the crisis on unemployment. More than 1,400,000 workers participated in the scheme. At this moment unemployment is about 500,000 people lower than it would have been without that scheme. However, in spite of the positive effect of the scheme, it is a possible obstacle to permanent recovery because it makes it harder for companies to expand and hire new workers. The hostility in the labor market will probably not only result in higher unemployment rates but it also can push the discouraged job-seekers into disability schemes (OECD Employment Outlook 2009). [...]
[...] Especially, the quick implementation of such programmes is difficult to be put in practice Conclusions The global economic crisis had an enormous impact on the economies of all EU countries. Germany was heavily affected due to the fact that the country didn't meet the expectations for high export rates. Compared to 2007, the macroeconomic indicators were relatively lower in 2008 and 2009. However, the construction industry in the country had a couple of good years and some big companies (like Strabag AG and its major competitors) experienced growth due to the fiscal stimulus packages. [...]
[...] (Litowska, I & Stenqvist, A., 2008) Table Strabag AG Ratings Corporate Credit Rating BBB- /Stable/ Senior Unsecured BBB Local Currency Corporate Credit Ratings History 14-Nov-2007 BBB- /Stable/ 25-May-2007 BB+ /Positive/ 30-May-2006 BB+ /Stable/ 18-May-2005 BB /Positive/ 15-Feb-2005 BB /Stable/ Business Risk Profile Satisfactory Financial Risk Profile Intermediate Debt Maturities At March 31, 2008: Less than one year: mil. Thereafter: mil. Source: Litowska, I & Stenqvist, A. (2008) Ratings Direct. Strabag SE, Standard & Poor's Strabag AG proved to be relatively resistant to the crisis due its good market position. The broad alignment is the key strategy for the success of Strabag AG. [...]
[...] Germany is the most important market of Strabag AG as the company emerged from the very beginning of the development of that market after the consolidation of the two German states. In spite of the overall downturn in the construction industry, Strabag AG is optimistic about the future. The indicators for the first and the second quarter of 2009 were negative due to the impact of the weather conditions. The company experienced a decline by 14 per cent billion EUR). [...]
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