Germany's Economy Expanded in 2014

February 25, 2015Germanyby EW News Desk Team

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According to official data published at the beginning of this year, it was consumer spending that drove Germany's economy during 2014. Now experts are feeling positive about the future. Some officials have suggested that the largest economy in the Eurozone may actually be able to perform far better than expected during 2015.

In the final quarter of the year, gross domestic product rose by 0.25% according to the federal statistics office. Throughout 2014, growth managed to rise to approximately 1.5%, which accurately reflected analyst estimates. Although the percentage seemed low to some, it was a huge improvement compared to the 0.1% growth a year earlier. According to the statistics office, the benefits are a result of increased employment and improved consumer spending.

Economic Improvement

According to the president of the statistics office in Germany, Roderich Egeler, the increased strength of consumer spending was something of a new concept for Germany. Generally, it has focused more on the value of exports when it comes to driving growth.  However, because employment is up, the statistics office suggests that more consumers have money to spend.

In 2014, the number of employed people in Germany rose to 42.7 million, an increase of approximately 0.9% or 371,000. This is the eighth year in a row for employment growth. As of November 2014, the unemployment rate was approximately 5%.

Sensible Labor Laws

Around a decade ago, Germany decided to overhaul its labor laws, which made it far easier for companies and organizations to dismiss workers. Although this sounds ominous, it served to make companies feel more comfortable about the prospect of hiring new people because they had dismissal flexibility.

Europe is Weak

The Eurozone’s economy could benefit with successful Central Bank asset purchases.  Although Germany’s economy is relatively strong, most of the Eurozone continues to struggle.

If Germany continues to improve, pressure may force them to provide additional assistance for its neighbors.  Reforms including lower taxes and reduced regulations could spur the regions’ economies.  The governments could also spend money on infrastructure projects to help the private sector.

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