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Germany is not the only one to blame

Germany: Europe’s predator, or, at best, exploiter – these are some of the least derogatory adjectives that we have been hearing throughout countries in the European Union and beyond for a while now.

It is widely accepted that Germany succeeds at the expense of the other club Europe members. And yet, this statement is debatable.

It is true that Germany, and its 82 million inhabitants, has boasted an offensively healthy economy in recent years, especially given the current global economic crisis. Countless numbers and statistics confirm this economic phenomenon.

Thus, while the average unemployment rate in the Euro zone is 11.4%, in Germany, it is as low as 5.5%.

Its current foreign trade exceeds 175 billion Euros, whereas France’s is 72 billion in deficit.

The value of Germany’s exports to India is nearly 9 billion euros and constitutes over a quarter of total exports to India by the 27 countries.

Is this cause enough to suspect that it profits at the expense of other economies in the European Union?

It is true that Germany makes profits mainly at the expense of other European countries, France and Great Britain in particular.

But this observation is not sufficient to discredit this country’s entire economic policy.

The current slowdown in German growth is expected to increase in 2013.

Observers emphasise that German sales to other European countries is not a form of dumping in terms of commodity prices or hourly labour costs, but rather it is due to the quality and attraction of products on offer.

Remember that German wages and salaries in many sectors are currently on the rise.

German companies have survived because of their high numbers of part-time employees and because employers and unions have negotiated many agreements to maintain employment when order books tend to thin out.

The car industry provides a simple example of the attractiveness of goods made in Germany, which is a key feature of industrial competitiveness worldwide.

German cars sell well because they use high quality technology and have a high quality image, as well as an efficient and well-established international sales network.

Thus this industrial sector, like the machine tool sector, is easier to export despite the obvious slowdown in economic growth.

The aforementioned performance in the context of trade with India is largely due to the flow of German car and machine tool exports.

Selling and exporting high quality commodities made in medium-sized companies and big industry production lines with comfortable margins does not constitute an act of aggression towards other European countries, as far as we know.

For the sake of impartiality, we emphasise that Germany has a serious demographic problem, which it needs to try to resolve to maintain a dynamic economy.

It may also give its partners the impression of wanting to dominate Europe, particularly Southern European countries.

It is fair to say that Germany is not the only one to blame.


M.T. for Indiary
October 2012

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