
Germany recently posted remarkable economic growth figures for the second quarter. The results were so strong, in fact, that almost single-handedly the German economy has managed to pull the eurozone as a whole up to a 1% growth for the quarter, which, bearing in mind the travails of the likes of Greece and Spain is quite a remarkable achievement.
How has the growth been achieved? Mostly the weak euro has made German exports cheap, and many German manufacturers had positioned themselves well to accelerate when the economic storm clouds lessened at the end of 2009.
There is, however, a more significant factor than just flexibility and the weakness of the euro. Germany has worked extremely hard to build strong trading relations with some of the most upcoming economies in the world. China is a massive partner, making up nearly 100% of the lucrative German textiles market, whilst German cars like Volkswagen are posting astonishing figures. Germany has also built strong relations with Brazil, another of the fastest growing economies in the world.
Whilst some experts argue that this is a risk for a country of the size of Germany, the success of the Germans offers some guidance for investors, whether that be through spread betting experts like Trade Fair or directly on the markets. Developing markets are an excellent way of generating massive profits, in fact, in the current climate, some would argue that it’s the only way.
Obviously the secret to good investing is to spot the opportunities early and make the most of them. Growth has to come from unexpected areas, and despite some of its well-reported financial problems recently, there are areas of eastern Europe that are on the verge of kicking into high levels of growth. If you can spot the right market early enough, you can make a good profit.
For spread betters, how does this work? Well, you can always trade currency, economies that develop quickly often have rapid currency appreciation. Another thing you can do is check out which companies are listed on national stock exchanges or have a strong presence in developing economies and buy into their stocks. If you’re looking for a long term, profitable position, make sure you keep an eye on the developing markets.
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