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Slowing German economy must raise investment

Geoff Riley

19th October 2014

If you have studied the economic importance of capital investment as part of your macroeconomics, then this short article on the German economy (Europe's biggest but experiencing weaker economic growth) will be of interest.

The German Finance Minister wants the ratio of investment to GDP to start climbing again with infrastructure projects at the forefront of his mind. But how best to finance this when the German priority is to control government debt?

Here is another relevant article from the Guardian:

As cracks in its economy widen, is Germany’s miracle about to fade?

www.theguardian.com/world/2014/oct/19/german-economy-miracle-about-to-fade

Like many advanced economies, much existing infrastructure is ageing and causing structural problems for businesses and households alike.

"Forty per cent of all bridges and a fifth of the motorway network are said to be in a “critical state”, causing traffic jams and delays up and down the country."

Investment spending as a % share of GDP

You can download some data on Germany by heading to Google Public data and the latest figures from the IMF's October 2014 World Economic Outlook

Gross Government Debt (% of GDP)

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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