A A BUSINESS ISSUES
From bust to boom
Lesson code: 11AC-D6NC-91TH UPPER INTERMEDIATE +
1 Warm-up
Which products/industries do you associate with Germany?
2 Vocabulary - Finance and investment
Complete the sentences with the words below:
asset bailout capital controls deficit emerging
inflation peg powerhouse recovery boom
1. A boom is a sudden period of economic growth. The opposite is a `bust'.
2. The government spent more money than it received. The was over $200 million.
3. Japan is traditionally the most successful economy in East Asia. It is the of the region.
4. After asking for financial help from the government, the bank received a of $10 billion.
5. Investors are interested in markets such as China and India, which are undergoing a
process of economic growth and industrialisation.
6. Some countries their currencies to the dollar in order to stabilise them.
7. In order to prevent people from taking their funds out of the country, some governments introduce
- for example banning transfers from domestic to foreign bank accounts.
8. Any item of economic value, owned by an individual or company, is called an .
9. After a long recession, the economy is finally showing signs of .
10. Prices are rising rapidly - the country has high .
3 Predict the answers
Decide if the statements are true or false. Read the article to check. Correct the statements that are
false.
1. Germany is the powerhouse of the European economy.
2. Unemployment in Germany is increasing.
3. China is a bigger exporter than Germany.
4. China pegs its currency to the euro.
5. Germany has introduced capital controls to fight inflation.
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From bust to boom
A A A A BUSINESS ISSUES
Boom time for investors in Germany
Economic fundamentals and solid exports are driving Europe's top performer.
1 Many European fund managers are now turning 7 As well as healthy export figures, falling
their attentions to the west and praising Germany unemployment levels seem to have caused
as the one of the best investment opportunities German consumers to spend more too.
around.
8 All of these factors have led to such a strong
2 The troubles of the banks and the huge deficits of recovery in Germany that economists are debating
the so-called Pigs (Portugal, Ireland, Greece and whether the level of growth will be higher than
Spain) nations has focused the minds of investors their forecasts. Mr Norris compares this potential
on the fundamentals of exports, economic level of growth to that of an emerging market, but
strength and workforce skills. And by these adds that Germany has several important
measures, Germany is truly the powerhouse of advantages over developing economies.
the European economy.
9 Firstly, investors can enjoy cheaper stock prices
3 "This concept of how you can have a boom and a because the boom is still relatively undiscovered.
bust coexisting is quite a difficult one for investors In contrast to China, for example, investors are
to understand, but Germany is booming," says not yet expecting massive growth which is
Barry Norris, the manager of the Ignis Argonaut reflected in valuations of stocks. Secondly,
European Alpha Fund, which has increased its whereas authorities in emerging-market
exposure to Germany holding 35 per cent of its economies are raising interest rates and
assets in the country. introducing capital controls to fight inflation, as a
4 With struggling economies and bailouts elsewhere euro member, Germany is continuing with low
in Europe, investors could be forgiven for steering interest rates despite its strong economy. As the
clear. But Mr Norris argues that this shouldn't economy goes from strength to strength, German
distract people from this investment opportunity. asset prices will also rise.
5 "Over the past five years, the unemployment rate 10 While an exciting prospect for investors, investing
in Germany has come down every year, which is heavily in Germany also carries considerable
a good sign of its competitiveness. Exports are currency risk and any European assets could
back up to a record level and it is now neck and plummet if Greece, Ireland and Portugal cannot
neck with China as the world's biggest exporter," repay their debts. This is where the old investment
he says. rules ring true: where there is any uncertainty,
diversification is the best way to spread risk.
6 As currency traders dump the euro in light of the
debt crisis, German exporters are taking 11 "It certainly pays to be selective when investing in
advantage. With a strong euro, German products Europe at the moment. Having wide exposure to
become expensive and difficult to shift, but with a the entire European market means investing in
weakened euro, German companies are able to some very troubled economies as well as those,
sell more of their goods abroad. Companies such such as Germany, with better prospects," says Mr
as BMW, for example, are benefiting from high Bamford of independent financial adviser Informed
demand in emerging markets, and because China Choices.
pegs its currency to the US dollar, the weakened
euro has boosted profits for German Adapted from The Independent, by Chiara
manufacturers. Cavaglieri and Julian Knight, 5 December 2010
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From bust to boom
A A A A BUSINESS ISSUES
4 Checking understanding
Answer the following questions in your own words:
1. By which economic factors is Germany the powerhouse of Europe?
2. What has caused the euro to weaken?
3. Why are German companies able to sell more goods abroad?
4. What has caused an increase in consumer spending in Germany?
5. Why might potential investors consider Germany to be more attractive than emerging economies?
6. Why is it also risky to invest in Germany? What investment strategy can reduce this risk?
5 Find the words
Find a word or phrase in the article which means...
1. very large (adj., P2)
2. existing at the same time (verb -ing, P3)
3. avoiding something (idiom, P4)
4. on the same level (idiom, P5)
5. sell something that you don't want (verb, P6)
6. becomes more and more successful (idiom, P9)
7. fall rapidly (verb, P10)
8. seems to be true (idiom, P10)
6 Phrases in the text
Match the following words to form phrases from the text and create a sentence for each collocation:
1. a huge a. deficit
2. high b. demand
3. a strong c. exposure
4. massive d. growth
5. an exciting e. prospect
6. wide f. recovery
7 Talking point
How attractive is your country for potential investors. Describe the advantages and disadvantages
using vocabulary from the lesson.
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