Economy of any country in the world Term Paper Example | Topics and Well Written Essays - 500 words

Economy of any country in the world - Term Paper Example The topic is of importance as it addresses serious concerns and a significant setback to the development and economic independence of Germany. The consistent rise in pension to the ageing population results in higher taxes affects the nation’s contribution to the European and NATO defense activities. As at 2013, Germany’s GDP reduced significantly (Federal Statistical Office, 2015). That represents an underperformance in the GDP of Germany compared to her trading partners in the EU such as Italy, France, and Spain. German’s membership in the European Economic and Monitory Union (EMU) leaves the German Bundesbank out of control of its monetary policy. Instead, it depends on the European Central Bank (ECB) for determination of the rate of interest and money supply in setting monetary policy (Forex Market Watch, 2015). Macroeconomic policies in the EU grant the ECB bank the authority to reduce interest rates. In 2012, the ECB reduced the rates only from 5.6% to 4.1% this it does in the favor of nations with higher GDP growth leaving Germany, the largest economy in the EU, adversely affected. In the 1960s, Germany’s unemployment rate was at 2.7%, the percentage reversed suddenly in the onset of the new millennium with the rate of unemployment rising to 10.4%, as at 2005. The unexpected increase in unemployment rate was an indication of low performance of Germany’s economy as compared to the rest of EU nations. Germany’s unemployed population often has little motivation to find jobs because of low wages. The unemployment rate is also propelled by lack of benefits to those earning average salaries (Ahearn & Belkin, 2010, p. 6). Germany’s low productivity experienced in the 90s and early 2000s led to the collapse of its major industries (OECD, 2011, p. 22). The output per hour per employee dropped at an annual rate of 4.7% between 1995 and 2007, and this was an acute decline compared to the