Business Environment in Germany
Germany is Europe's primary economy. Over the last few years, its performance has not been dynamic due to the country's vulnerability to outside shocks, domestic structural problems and the permanent difficulties of integrating the formerly communist eastern part. Strongly hit by the international financial crisis, Germany went into recession in 2009 and then recovered growth in 2010 (3.3%) under the combined effects of the stimulus plan and the resumption of international trade and investment. Some believe that the pre-crisis level of activity will be reached as soon as at the end of 2011.
Thanks to the good economic situation, the government’s priority is now to deal with the budget deficit, which soared during the crisis and to implement measures favoring investment and new technologies, in order to diversify the economy and no longer depend on exports.
Despite the gravity of the recession, Germany was able to contain its unemployment rates around 8%, thanks to the adopted measures. The integration of the former Eastern Germany, where the unemployment rate remains very high, nevertheless continues to pose problems.
|GDP (billions USD)||3,338.68||3,315.64e||3,518.59||3,599.98e||3,691.07e|
|GDP (Constant Prices, Annual % Change)||-4.7||3.5e||2.5||2.1||1.9e|
|GDP per Capita (USD)||40,832||40,631e||43,205||44,293||45,504|
|General Government Balance (in % of GDP)||-1.0||-2.2||-2.1||-1.5e||-1.0e|
|Inflation Rate (%)||0.2||1.2e||2.2||1.5e||1.8e|
|Unemployment Rate (% of the Labor Force)||7.5||6.9||6.6||6.5||6.3|
|Current Account (billions USD)||160.63||181.91e||189.45e||168.71||-|
|Current Account (in % of GDP)||4.8||5.5e||5.6e||4.9||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
The German agricultural sector contributes about 1% of the GDP and employs about 2,5% of the active population. The sector has greatly benefitted from State subsidies. Main agricultural products are milk, pork and livestock farming, sugar beet and cereals. Consumers prefer organic agriculture. The country is going through a process of deindustrialization of the food sector.
The contribution of the industrial sector to the GDP has dropped from 51% in 1970 to about 29% today. However, the German economy still has some specialized sectors such as mechanical engineering, electric and electronic equipment, automotive and chemical products. The automotive industry is one of the country's largest industrial sectors, and is the world's 3rd exporter of cars. Nevertheless, the crisis has affected German industry, especially the automotive sector as well as equipment, with a decrease in orders and the implementation of partial unemployment plans.
The tertiary sector contributes about 70% to the GDP. The German economic model relies mainly on a dense network of SMEs; there are more than 3 million of them employing 70% of the salaried workers.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||2.2||29.7||68.0|
|Value Added (in % of GDP)||0.8||26.5||72.7|
|Value Added (Annual % Change)||8.9||-14.9||-1.4|
Source: World Bank - Last Available Data.
|Euro (EUR) - Average Annual Exchange Rate For 1 USD||0.80||0.80||0.73||0.68||0.72|
Source: World Bank
Indicator of Economic Freedom
- Mostly free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
Trade represents more than 80% of Germany’s GDP; with exports representing about 40% of GDP, Germany is a leader in exports (only recently caught up with by China).
The global recession which has lead to a decrease in exports reduced the positive trade balance of the country, however since the beginning of the recovery, trade balance shows comfortable surplus and this trend should continue in the coming years.
The whole of the European Union is its primary trade partner: around 60% of German exports and 60% of its imports are done with the EU. China and the U.S. are the other two main partners.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||906,684||1,054,980||1,185,070||926,347||1,067,107|
|Exports of Goods (million USD)||1,108,107||1,321,214||1,446,172||1,120,040||1,268,840|
|Imports of Services (million USD)||224,081||258,682||288,401||252,543||256,289|
|Exports of Services (million USD)||187,830||221,929||255,789||225,756||229,861|
|Imports of Goods and Services (Annual % Change)||11.9||5.0||3.3||-9.4||-|
|Exports of Goods and Services (Annual % Change)||12.5||7.8||-||-||-|
|Imports of Goods and Services (in % of GDP)||39.7||39.8||41.0||35.9||-|
|Exports of Goods and Services (in % of GDP)||45.4||46.9||47.5||40.8||-|
|Trade Balance (million USD)||198,053||270,621||265,097||188,348||-|
|Trade Balance (Including Service) (million USD)||166,016||236,214||228,100||-||-|
|Foreign Trade (in % of GDP)||85.0||86.7||88.5||76.7||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|Other partnersClose extended list||63.6%|
(% of Imports)
|Other partnersClose extended list||63.2%|
Sources of General Economic Information
Ministry of Finance
Ministry of the Economy and Technology
Ministry of Cooperation and Development
Ministry of Food, Agriculture and Consumer Protection
Ministry of Transport, Building and Urban Affairs
Ministry of Culture and Research
- Statistical Office
Federal Statistical Office
- Central Bank
- Stock Exchange
Deutsche Börse Group
- Search Engines
- Economic Portals
German business portal
- Executive Power
- The Head of government is the
Chancellor, who is elected by absolute majority in the Federal Assembly for a four year term.The Chancellor holds the executive power, which includes implementing the law and managing the everyday business of the country. The Federal Ministers (Council of Ministers) are appointed by the president on the recommendation of the Chancellor.
The Head of State is the President. He is elected for a five year term by the Federal Convention (which includes the members of the Federal Assembly and an equal number of delegates elected by the provincial legislatures). The role of the president is mainly ceremonial.
- Legislative Power
- The legislative power in Germany is bicameral. The parliament is made up of two houses: the Federal Assembly (the lower house), with 613 seats, whose members are elected by universal suffrage combining proportional and direct representation, for a four year term. And the Federal Council (upper house), with 69 seats, whose members are delegates from the 16 provinces of the country for a 4 year term. There are no elections for the Federal Council. Its composition is determined by that of the provincial governments. The government depends directly or indirectly on the support of parliament, generally expressed by a vote of confidence. The Chancellor cannot dissolve parliament directly, but he can recommend its dissolution to the president if there is a vote of no confidence within the Federal Assembly. Legislative power belongs both to the government and the parliament. German citizens enjoy considerable political rights.
- Main Political Parties
Christian Democratic Union (CDU): conservatives
- Christian-Social Union (CSU): conservatives
- Social Democratic Party (SPD): social democrats
- Free Democratic Party (FDP): liberals
- Bündnis90/die Gruenen: left/green
- Current Political Leaders
- President :
Horst KOEHLER (CDU) since July 2004 (re-elected in May 2009).
Chancellor : Angela MERKEL (since November 2005) CDU, head of a coalition backed by the CSU and the SPD.
- Next Election Dates
- Chancellor: November 2013
Indicator of Freedom of the Press
- World Rank:
- 2 places up compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
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