International Trade in Germany

News Related to International Trade in Germany

Business outline for Germany

Main Industry Sectors

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.

Economic Overview

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.

FDI in Figures

Germany is an attractive country for direct foreign investment. However, due to the global financial crisis, the FDI flows dried up and should remain less dynamic even in the coming years.
The country's strengths are: a fabric of the industrial sector which is dense and powerful, a skilled workforce which has a good command of the English language, as well as a geographic location in the center of Europe. Germany's main weakness is its high taxation rate (of both individuals and corporations).

FDI Government Measures

The Germany government is implementing mesures aimed at encouraging investments in the country:

- Financing by the European Union and/or by German federal entities;
- Aid aimed especially at the initial investment phase but also at the operational phase of the project.

Country Strong Points

Germany's strong points are:
- A strategic location at the center of Europe;
- The biggest population of the European Union;
- Advanced technology and expertise;
- A highly qualified work force;
- Competitive taxation.

Country Weak Points

Public finances are stucturally highly in deficit. The eastern part of the country is struggling to catch up in many fields. The ageing population weighs heavily on growth. The unemployment rate poses a real challenge for the development of the country and its future influence.

Foreign Trade Overview

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.