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Germany - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Berlin
Area:: 357 km2
Total Population:: 80.426
Annual growth rate:: -2.00%
Density:: 231.00/km2
Urban population:: 74%
Population of Berlin (3.943), Hamburg (3.260), Frankfurt (2.717), Munich (2.600), Stuttgart (2.330), Cologne (1.017)
Official language: German.
Other languages spoken: Most Germans have a very good knowledge of English. Quite a few of them speak French. Additionally, though less frequently, Italian, Spanish and Russian are also spoken.
Business language: The business languages are German and English.
Ethnic Origins:: Nearly one inhabitant in five (18.4%) has foreign roots. Foreigners living in Germany come from Turkey (1.7 million), Italy (0.5 million), Poland (0.4 million), Serbia-Montenegro (.3 million), Greece (0.3 million), Croatia (0.2 million) and Russia (0.18 million).
Beliefs: Christians 62.5 % (Catholics 31.4 %, Protestants 31.1 %), Muslims 4 %, Jews 0.2 %.
Telephone codes:
To make a call from: 0
To make a call to: +49
Internet suffix:: .de
Type of State::
Germany has 16 States or provinces, which have local governments and legislatures that enjoy considerable decentralization in relation to the federal government.
Type of economy::
High-income economy, OECD member, G8 member
The leading European power; the world's second largest exporter.

Economic overview

Germany is Europe's largest economy, which explains its leading role in managing the current debt crisis of the eurozone. Over the last few years, its performance was not optimal due to the country's vulnerability to outside shocks, domestic structural problems and ongoing difficulties in integrating the formerly communist eastern part. German grew very slowly in 2013 (0.5%), but the outlook for 2014 is better (1.6%).

The German economic indicators are a source for envy. Its current account surplus should reach 7% of the GDP, the social security funds show a suprlus of around 30 billion euro and public finances are also running a slight surplus. The German economic model, which relies on trade (exports of industrial goods), provoked two large debats in 2013, which had to do with trade surplus and the minimum wage. Germany has to do with a pressure to stimulate domestic deman through an increase in investment. The turning away from nuclear energy, which should happen by 2022, will require enormous investment, which will add to the 20 billion euros already allocated for the development of renewable energies in 2013. The new government will probably gradually reduce subsidies. While around 7.3 million people are working precarious, low-paid jobs without welfare protection, a wage increase above the level of inflation is also planned. The main challenge for the German government is still managing the debt crisis of the eurozone.

Despite the recession, Germany has managed to keep its unemployment rate at around 5.2%. However, the challenge of integrating the former East Germany, where unemployment is very high, persists.

Main industries

The German agricultural sector contributes about 1% of the GDP and employs about 1.6% 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 28% 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 Germany the world's 3rd largest exporter of cars. German decision to abandon civil nuclear energy by 2022 is also likely to remodel the German industrial landscape.

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.

Foreign trade overview

Trade represents more than 95% of Germany’s GDP (WTO average for 2010-2012). With exports representing about 40% of GDP, Germany is a leader in exports (only recently caught up with by China).

In 2013, Germany's trade surplus reached record levels (189.9b euro), with imports decreasing more quickly (-1.2%) than exports (-0.2%). A recovery of exports is expected in 2014 (+4%) and also, to a lesser extent, of imports.

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

FDI

Germany is a very attractive country in terms of foreign direct investment, but FDI flux have declined after the beginning of the global recession in 2008 and the euro zone crisis which followed in 2012. They should recover in 2014. According to UNCTAD, the country is world's sixth largest investor. Prior to the crisis, it experienced rapid growth of FDI flows from Asia, especially from China and India.

Among the country's strengths are its very high and powerful industrial network, a highly skilled workforce with a good command of English and a location in the heart of Europe. Its main weakness is a high tax rate (for both individuals and businesses).
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