PPP Econ. Analysis

8/13/2019 PPP Econ. Analysis

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19.12.2012


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Content

1. Introduction

2. SWOT Germany

3. SWOT Croatia

4. Summary

2Croatian Studies, Presentation09.02.2014


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Introduction

Why compare the Germand and Croatian economy?

Croatia joining the EU in 2013

Croatia facing economic downturn

Germany facing current decline but good predictions

What are the positive and negative aspects of both?

09.02.2014 Croatian Studies, Presentation 3


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Largest economy in Europe

Biggest competitive advantages of Germany is theexport sector

Central location in Europe -> center for InternationalBusiness

Good education system

Strengths - Germany



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The labor force is growing older

low participation of (married) women and mothers inthe labor force

The taxes on labor in Germany are considered to beenormously high

High taxes -> stop immigration among highly skilledworkers

Weaknesses- Germany



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Opportunities- Germany

Beneficiary of Globalization

60% of Germanys export growth will continue tocome from European Integration and from EasternEurope.

German economy will profit more than any otherindustrialized country from the growth of the BRICeconomies



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1. The crisis of other European countries

Possible bankruptcy of other European Countries: $900bn

The Euro fails completely: $1,5 trillion

2. declining birth rates is a serious problem

In 2011, fewer babies were born in Germany than atany time in its history

over the last decade, the number of Germans under theage of 18 has declined by 2.1 million

Threats - Germany



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Threats - Germany



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1. Tourism

Steady growth in tourism sector, well developed andhighly competitive

More than 11 (!) million visitors in 2011, 2.5 timesthe population of the country

Stable HRK, makes holidays cheaper than otherEuropean destinies

2. Strategic geographical location

Mediterranean Sea and old trade routes towards theorient

Strengths - Croatia



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1. Global economic crisis

Deep recession with consecutively shrinking

Growth expected in 2014: 1,4%

Unemployment rate 17% (GER: 6,5%, FRA: 10,7%)

2. Structural Problems

Corruption

Failing ship construction industry

High dependence on imports

Weaknesses- Croatia



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1. Entry into the European Union

More foreign Investments

Infrastructure projects, esp. for rural areas

larger market for Croatian products2. Education System

Expected impact of past measures, 52% enrollmentrate in tertiary education

3. Shadow economy

Can provide government with more taxes, lowersexpenditures for social benefits

Opportunities- Croatia



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1. Government Debt

Public debt has risen to 64% of GDP

Severe cuts in Government spending, influencing

domestic demand

2. Private Debt

More than 40% of the households spent 20% of theirincome to cover their debt.

Combined with lower incomes, again lowers domesticdemand

Threats- Croatia



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Both economies have positive and negative aspects

EU brings great opportunities for Croatia

Germany has more demographic problems

High skilled workforce immigrating to Germany

Automobile exports

Summary


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PPP Econ. Analysis