Was Germany helped by a weaker euro?
This week's very impressive growth figures for the German economy in the second quarter 2010 brought gasps from many economists. However, on further consideration it looks as though Germany has more than any other country in the euro zone benefited from a massive increase in exports helped by the weaker euro. So is this improvement in the German economy a short-term event?
All eyes will be on the German and French economies in the short to medium term as they will inevitably dictate the future direction of the euro zone economy. If, as many expect, we see short-term weakness in the German and French economies then ultimately this will be replicated across Europe and bring down growth expectations and growth figures for the euro zone. However, today is most certainly a time to rejoice at the much better than expected figures from within the euro zone which have helped to support investment markets.
There is no doubt that many within the euro zone and within the EU specifically are looking to create a federal Europe which would inevitably attempt to take on the might of the US. Whether this will be a true concerted effort to bring about a federal Europe remains to be seen because there is much resistance in areas such as the UK.
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