Question

***This is a International Finance Course***

Country Analysis (Germany): Essay

Prepare a Word Document of the General background information regarding the country selected (Germany) (e.g.risk elements, with more emphasis on recent events).

In a minimum of 500 words, be sure to include the following:

1. Regional transactions exposure and approach.

2. Regional translation exposure and approach; and

3. Regional operating exposure and other descriptive events or information.

Answer 1

ECONOMICAL ASPECT OF THE COUNTRY:

The German economy the 5th largest economy in the world and Europe's largest. Is a leading exporter of machinery, vehicles, chemicals, and household equipment and benefits from highly skilled labour force.

Embarking on modernization and integration of Eastern German economy-where unemployment can exceed 20% in some municipalities-continues to be costly long-term process with annual transfers from the west to east amounting in 2008 to roughly $12 billion.

Reform launched by Government of Chancellor Gerhard Schroeder(1998-2005).

Addressing chronically high unemployment and low average growth.

Which resulted to strong growth and falling unemployment in 2006-07.

New post-reunification of unemployment low to 7.8%.

Reducing working hour scheme.

Chancellor Angela Merkel biggest challenge was to fight with reccession.

Modest increase in unemployment during recession(2008-09) healthy decrease in 2010. Recovering well as GDP contracted nearly 5% in 2009 but grew by 3.3%.

Germany manage to creap out of recession largely to rebounding manufacturing orders and exports-primarily outside the euro-zone

Stimulus and stabilization efforts initiated in 2008 and 2009 and tax cuts

Results second term increased Germany's Budget deficit to 3.3% in 2009 and to 3.6% in 2010

The economy follows free market principles with a significant degree of government regulation and generous social welfare programs and protections. The state plays a role in the economy, providing subsidies to certain sectors and by retaining ownership of some segments of the economy, while promoting competition and free enterprise.

Economic life in Germany is more international in nature than in most other major industrial nations. One in three euros in Germany is generated through exports; nearly one in four jobs depends on exports.

Current Scenerio:

GDP (2010 nom.): $3.339 trillion.

Annual growth rate: (2010 est.) 3.5%; (2009) - 4.7%; (2008) 1.7%.

Per capita GDP (2010 nom.): $44,660.

Inflation rate (December 2010): 1.6%.

Unemployment rate (October 2010): 7.5%.

Agriculture (0.9% of GDP in 2010):

Products-corn, wheat, potatoes, sugar, beets, barley, hops, viticulture, forestry, fisheries.

Industry (26.8% of GDP in 2010):

Types-car-making; mechanical, electrical, and precision engineering; chemicals; environmental technology; optics; medical technology; biotech and genetic engineering; nanotechnology; aerospace; logistics.

Trade (2009): Exports-$1.124 trillion: chemicals, motor vehicles, iron and steel products, manufactured goods, electrical products.

Major markets (2009)-France, Netherlands, U.S. Imports--$937 billion: food, petroleum products, manufactured goods, electrical products, motor vehicles, apparel. Major suppliers-Netherlands, China, France.

Resources

Germany has 107 cu km of renewable water resources, of which 86% are used for industrial purposes.

Germany relies principally on fossil fuels as sources of energy.

40% energy consumption - petroleum

30% consumption -domestic coal deposits.

17% consumption - natural gas

10% consumption - nuclear energy

Other sources of energy, such as hydroelectric, solar, or wind-powered electric power plants, are relatively insignificant.

Most production is in private hands.

Environment current issues:

Emissions from coal-burning utilities and industries contribute to air pollution.

Acid rain resulting from sulfur dioxide emissions, is damaging forests.

Pollution in the Baltic Sea from raw sewage and industrial effluents from rivers in eastern Germany; hazardous waste disposal.

Still by 1994, 50% of Germany's forests had been damaged by acid rain.