Germany's Country debt per GDP

This year’s horizontal fiscal policy guidelines (in the context of the European Semester) for Germany.

“The European Commission’s Annual Growth Survey and subsequent ECOFIN Consultations, have agreed to make clear that fiscal consolidation is an essential condition to return to higher growth and employment. All Member States should continue to respect their commitments under the SGP (German Stability Program) which allow the automatic stabilisers to work around the agreed path of structural fiscal adjustment, while ensuring the long -term sustainability of public finances. Member States that are part of an assistance programme and under pressure from financial markets should meet agreed budgetary targets and, if necessary, stand ready to pursue further consolidation measures. As part of the consolidation strategy, priority is to be given to future investments, in particular in regard to education, research and innovation. The efficiency and effectiveness of the tax system should be reviewed, and it has been suggested that the tax base should be broadened, unjustified exemptions abolished and taxes should be shifted away from labour.”

Source: http://ec.europa.eu/europe2020/pdf/nd/sp2012_germany_en.pdf

German debt per GDP, is not on a very high proportion, if you look at Greece for example, its percentage of debt per GDP is much higher although the actual money debt might seem less to a not trained economist. The latest fiscal policy applied by the German Government I a contractionary policy. A fiscal policy is changes in the levels of taxation and government spending meant to expand or contract the level of aggregate demand in a nation to promote macroeconomic objectives such as full employment, stable price and economic growth. A contractionary fiscal policy, the one which I believe has been adopted by Germany, occurs If the government reduces its spending and / or increases the level of taxation, aggregate demand will decrease and shift to the left. This would help diminish their country debt per GDP. 

Germany's Economic Key points

Dear Economic bloggers

                  For our IB Economics class our teacher, made us create a blog on economics. Each of us has a country to focus on. Germany is the country assigned to be. After plenty researches I have created a graph which explains and shows the basic key economic statistics of Germany. Demonstrating impressive resilience, the German economy has withstood the global economic uncertainty and the European sovereign debt crisis. The government has held firm to policies emphasizing sound public finance, keeping public spending under control through deficit-cutting efforts. Earlier labor market reforms that raised working-hour flexibility and reduced structural unemployment have contributed significantly to sustaining the relatively robust job market during the economic slowdown, and there appears to be strong momentum for recovery.

                  As you can see from the graph there was constant increase in government expenditure. Up to 2012 the German government expenditure was in a constant rise. Instead the investment expenditure had a 4 year rise, but then started diminishing. The Real GDP growth was quite inconsistent it increased and decreased unpredictably. The Real GDP was on a constant increase up to 2012. The unemployment rate was quite particular, because it diminished from 2011 to 2012, it was constant for the first semester of 2013 and then lowered again. This is a very positive aspect of German’s economy.  The same did the inflation rate. The Government deficit/surplus diminished the first 3 years, but then had a small increase. The government debt was on a constant rise. Last, but not least, household consumption had a small decrease and increase alternatively during the years.

Germany’s dependable commitment to regulatory efficiency and open-market polices continues to be bolstered by a legal framework that provides effective protection of property rights. The rule of law is well maintained, and a strong tradition of minimal tolerance for corruption is firmly in place.