Germany and Europe Dismayed!

Germany is a country with an eventful history and motivational attributes in Europe. There were times when Germany went through its bad and the Europe has suffered together, though differently in magnitude. To remember some, the era of Hitler threatened all Europe on humanitarian issues but one cannot disagree that Germany escalated economically during the same era. Also, the five-digit inflation rate during the Great Depression in Germany had slumped the whole Europe. The time has changed now, but interestingly the legacy has not. Not only with the scare, it is with welfare too that Germany is influential in Europe, why?

Germany, a home to more than 80.5 million people, is the most populated member of the European Union. With the existence of philosophers like Moses and Kurt Sternberg, the cultural and political integrity of German seems very strong. Besides that, the existence of scientist like Albert Einstein also talks about the technical strength of the country. If the statistics is looked into, Germany is the fourth largest economy in the world and the country with fifth largest purchasing power parity. The presence of world famous companies like Volkswagen, Siemens, BMW, etc. has helped Germany become the second largest exporter and the third largest importer of goods in the world. The universal health care system in Germany is an example for the world where it took more than 75 years to make the health services free in the country. Germany was also founder of European Community in 1957 which has evolved to European Union by now. Currently, it is a part of Schengen Area and operates in Eurozone since 1999.

These days, Germany has again started scaring the whole region. The investor confidence has shown sheer fall resulted by the low inflation and the strengthening Euro. A certain level of inflation has to be maintained by the economy for the consistent growth but Germany, lacking to do that has made oneself very vulnerable. The reason might also be that the largest economy portraying the very slow recovery process signaling the on-card vulnerability to the economic shocks. And on top of that, the European Central Bank (ECB) President has recently urged that the bank might add monetary stimulus to the market to check the challenge of the low inflation which has also increased the exchange rate. The unanticipated problems in the emerging markets, thus altering the imports and exports, have also led to this situation in Germany.

We might be aware how Nepal Rastra Bank made the commercial banks increase their paid up capitals to be able to counter the market demands, compete the international financial institutions. The EU banks have been asked to add to their capital to counter the upcoming challenges. The stress testing carried out to measure the health of banks in EU region only disappointed the policy makers.


Note: This article was published in the "Perspectives" of "The Himalayan Times".