Right now all the good news are coming from one place in Europe and that is
. Few days ago Germany raised it’s GDP forecast to 2.3% from previously forecast rate of 1.8%. Let see it’s GDP growth rates with EURO area – Germany
German labor cost which was highest level at once, has reduced lot in these years to match with others in this competitive world.
Now let see the jobless rate.
Retail sales are rising now all this can put pressure in economy by way of inflation as many economies are suffering from inflation. Euro area is also facing it’s late effect.
In December Euro zone inflation rose above the ECB’s target, Germany’s inflation also increases in December 2010, but looks like things are not going beyond their comfort zone.
Unlike others ,
has a healthy trade surplus. Look like all those advantages sometime works as an obstacle for Germany ’s own interest. Germany
Let talk about the first problem, as we know that many of these EU countries are facing huge debt problem, forget about PIGS there are many others who can appear there to include their name in PIGS. As we saw that few experts and political person from different countries were telling that greater contribution is needed from
to protect the strength of Euro and their deteriorating members. But Germany repeatedly manifested that quantity is not the problem and there is no need of increasing the fund of EFSF, in coming future there will be many meetings on this issue. Germany
But I think there is an escape from this problem & the process has already started .
China and already started providing their help to these problematic countries . One good example of that is the selling of bonds of these countries in last week. The new 5 billion Euro bond issued by EFSF was 8 times oversubscribed, this is quite outstanding. Japan
One important thing to say here that final price guidance of this 5 billion euro bond issue yields around 2.8%, just a premium of 0.57% above the German Govt. bond of same maturity. So this strong demand of these EFSF bond is very very good sign for not only the troubled countries but for overall EU.
The second issue is the EURO. As
is expecting more from export now if EURO appreciates it makes them loss in export market. So for Germany it is necessary that Euro should be in a favorable position. Though in currency market there are lot of speculations going on, as we saw in past that some experts almost equals the rate of US$ with EURO. But in real world, things always don’t go in same fashion. Germany
Though some experts said that this gains in EU bonds is short-term as its are going to show it’s true picture. Now definitely the question of paying in other’s fault comes?
Somewhere I was reading that poll indicates that, Germans still feel nostalgic for Deutschmark. So it is sure that
has the options. Germany
Few times ago Trichet said that EURO would still be around 20 years and told that price under EURO is more stable in Germany than it was in pro-euro years.
I think for
, existence of euro is very important in this competitive world. As in few days ago German chancellor Markel told that they will support whatever is needed to support the EURO, also with respect to the Rescue fund. But one thing that makes me anxious that is, Chinese & Japanese expectations from EU members. As we can’t forget that, exports contribute a huge portion in GDP of both Germany China & . So beyond so called saving of foreign reserve, there can be many things, which we don't know! may be in future ! Japan
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