GERMANY: ECONOMICS FOR YOU

The German economy has started well 2015 and the figures suggest that after a very positive first quarter growth will continue. He said a few days ago the Ministry of Finance in its monthly report, the Bundesbank confirmed, employers and the vast majority of economists.

"The basic industrial indicators and optimism among businesses and consumers suggest that the economy should continue to expand in the first quarter," says the latest bulletin issued by the ministry led by Wolfgang Schäuble. The paper, published a few days ago, shows that the number of unemployed decreased in the first months of the year, whereas cheap oil and increased purchasing power of families have boosted domestic demand. The latest data provide a largely positive image of the greatest economic power in Europe, where the private sector is gaining momentum, unemployment has fallen, and both retail sales and industrial production are increasing.

After touching the recession in mid last year, the German economy rebounded with growth of 0.7 percent in the fourth quarter of 2014 thanks to strong domestic demand, which is being driven by a historically low rate of unemployment, rising wages and cheaper oil prices. The government and the Bundesbank expect growth of 1.5 percent for 2015, and even some economic institutes have revised their forecasts upward to more than 2 percent.

Keep in mind also that these economic data comes in a context of few public investments. Merkel's government has approved this year's first balanced budget since 1969 and has set itself the objective of maintaining a zero deficit over the next five years.

"Vigorous" rise
"We expect the economic situation also continued with intense upward movement in the second quarter," he announced last week the German federal bank said in a statement. Bundesbank experts see this sustained growth on several pillars: "The main driving forces are external demand, private consumption and to a lesser extent, the construction of flats."

In addition, they are signs of a certain revival of the investment activity of the companies added. Thanks to the good prospects of the labor market and strong wage growth, the consumer situation in Germany continues to run on track in the opinion of the central bank.

The Bundesbank also emphasizes that households have a greater margin of expenditure not yet fully used. "In the fourth quarter of 2014 not only significantly up private consumption, but also the share of household savings." The president of the Bundesbank, Jens Weidmann, recently said he is confident that the economy will increase 1.5 percent in 2015 due to low oil prices and the devaluation of the euro.

Another sign of strengthening the perception of German businessmen on the US economy, which improved in March for the fifth consecutive month. The business sentiment index Ifo research center, based on a monthly survey of about 7,000 companies, went from 106.8 to 107.9 points in February this March, its highest level since July 2014.

The Ifo survey shows that German companies are increasingly optimistic about the current situation and its prospects for the next six months. "Strong growth in the fourth quarter of 2014, combined with low energy prices and the weak euro have boosted confidence in the economy," said ING economist Carsten Brzeski.

According to the German Economic Institute DIW, the German economy did not grow at such a high pace since 2011. Analysts expect this financial institution this year 300,000 new jobs were created and that the Gross Domestic Product (GDP) will grow by 2.2 percent, seven tenths above government forecasts. As explained last week the president of DIW, Marcel Fratzscher, fears of employers before the entry into force in January minimum wage of 8.5 euros per hour are not fulfilled yet. Companies strongly criticized the new measure and warned that it could cause massive job losses.

The minimum wage has improved the purchasing power of the Germans and encouraged them to buy. Most experts agree in pointing to domestic consumption as one of the keys to the current prosperity.