The economy of Germany, which had recorded negative growth since the recent global economic crisis, has been fast recovering to the state the nation enjoyed before the crisis occurred.

The factors of Germany's fast economic recovery are the following three: first, as overseas factor, increase in trade with emerging economies led by China; second, as internal structural factor, consistent investment in R&D centering on manufacturing-based industries, flexible labor market, and sound national financial management; and third, as policy factor, government policies to boost economic recovery which have successfully revitalized depressed local economy since the global financial crisis.

Germany's economic recovery which was led by favorable export growth is serving as a driving force for economic boost across Europe. Due to the strong will to secure financial soundness by the German government, it is expected that robust economic growth will continue in the region, with the financial conditions improving starting from 2011.

However, amid the rise in ECB's interest rate, external risk factors including continued financial crisis in neighboring EU countries, energy price fluctuations and slowed economic growth of China, are predicted to have adversary impact on the growth of Germany. In addition, drop in support for the incumbent administration is expected to potentially bring about delay in the implementation of the policies the Prime Minister and her right-wing coalition are currently considering.

Source: Korea Institute for International Economic Policy

(www.kiep.go.kr)