| Economy of Germany |
| Currency |
1 euro = 100 eurocent |
| Fiscal year |
Calendar year |
| Trade organisations |
EU, WTO (via EU membership) and OECD |
| Statistics [1] |
| GDP ranking |
5th (2005) [2] |
| GDP |
$2.446bn (2005) |
| GDP growth |
0.9% (2005) [3] |
| GDP per capita |
$29.700 (2005) |
| GDP by sector |
agriculture (1.1%), industry (28.6%), services (70.3%) (2005) |
| Inflation |
2% (2005) |
| Pop below poverty line |
13.7% (2003) |
| Labour force |
43.32m (2005) |
| Labour force by occupation |
services (71.9%), industry (25.9%), agriculture (2.2%) (2005) [4] |
| Unemployment |
12.1% (Jan 2006) [5] |
| Main industries |
iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food and beverages, shipbuilding, textiles |
| Trading partners [6] |
| Exports |
$1.016bn (2005) |
| Main partners |
France 10.6%, U.S. 9.3%, UK 8.4%, Italy 7.4%, Netherlands 6.2%, Austria 5.3%, Belgium 5.1%, Spain 4.9%, Switzerland 4% (2003) |
| Imports |
$801bn (2005) |
| Main partners |
France 9.2%, Netherlands 8.4%, U.S. 7.3%, Italy 6.3%, UK 6%, Belgium 4.9%, China 4.7%, Austria 4% (2003) |
| Public finances [7] |
| Public debt |
$1,417bn (62.4% of GDP) |
| Revenues |
$1,079bn (2004) |
| Expenses |
$1,173bn (2004) |
| Economic aid |
$5.6bn (1998) |
Since reunification, Germany faces low growth rates
Germany is one of the world's highest developed market economies. It is the world's third largest economy in USD exchange-rate terms, the fifth largest by purchasing power parity (PPP) and the largest economy in Europe.
Recent performance has not been dynamic, however, and the German economy is marked by vulnerability to external shocks, domestic structural problems, and continued difficulties in fueling formerly communist East Germany.
Germans describe their economic system as a "social market economy". An extensive array of social services is provided. Although the state intervenes in the economy through the provision of subsidies to selected sectors and the ownership of some segments of the economy, competition and free enterprise are promoted as a matter of government policy.
History
From the 1948 currency reform until the early 1970s, West Germany experienced almost continuous economic expansion (see also: Wirtschaftswunder), but real GDP growth slowed and even declined from the mid-1970s through the recession of the early 1980s. The economy then experienced eight consecutive years of growth that ended with a downturn beginning in late 1992. Since reunification in 1990, Germany has seen annual average real growth of only about 1.5% and stubbornly high unemployment. The best performance since reunification was registered in 2000, when real growth reached 3.0%. In 2003, Germany experienced a negative GDP growth about -0.1%. Estimated growth rate in 2006: +2.0%.
| Year |
GDP growth rate |
| 2002 |
+0.2% |
| 2003 |
-0.1% |
| 2004 |
+1.6% |
| 2005 |
+0.9% |
General view
The heart of the German economy is the industry sector (28.6% of GDP), though its share in GDP and the number of employees continue to decline. Since the late 1970s, most of the people work in the steadily growing service sector (70.3% of GDP), agriculture is of small importance (1.1% of GDP).
The German economy is heavily export-oriented, with exports accounting for more than one-third of national output (since spring 2003, Germany exports in absolute figures more goods than every other country). As a result, exports traditionally have been a key element in German macroeconomic expansion. Germany is a strong advocate of closer European economic integration, and its economic and commercial policies are increasingly determined by agreements among European Union (EU) members. Germany uses the common European currency, the Euro, and its monetary policy is set by the European Central Bank.
Despite this external vulnerability, most foreign and German experts consider domestic structural problems to be mainly responsible for recent sluggish performance. They note that
- an inflexible labour market is a main cause of persistently high unemployment
- the same is true for high non-wage labour costs
- heavy bureaucratic regulations burden many businesses and the process of starting new businesses
Nevertheless, the export oriented economy is doing well (exports grew 50% during the last 5 years), the main problem is a weak home market, in part due to a low consumer confidence. Therefore, some experts believe that Germany's current trouble doesn't result from domestic structural problems, but from stagnating wages over more than a decade. Germany finances its reunification to a large extent by social insurance contributions, forcing up non-wage labour costs. To conserve the competitiveness of German workers, the unions abandon high wage claims since the mid-1990s.
More than ten years after the unification of the two German states, great progress has been made in raising the standard of living in eastern Germany, introducing a market economy and improving infrastructure there. At the same time, the process of convergence between East and West is taking longer than originally expected and, on some measures, has stagnated since the mid-1990s. Eastern economic growth rates have been slower than in the West in recent years, unemployment is twice as high, prompting many skilled easterners to seek work in the West, and productivity continues to lag. Eastern consumption levels are dependent on public net financial transfers from West to East totalling about $65 billion per year, or over 4% of the GDP of western Germany. The German news magazine "Der Spiegel" estimates the total reunification costs between 1990 and 2003 at €1.25 trillion. In addition to social assistance payments, the government plans to extend funds to promote eastern economic development through 2019.
Industries
Media & Advertising
The German TV market is divided into two parts: A network of publicly-funded television stations, broadcasting several regional and specialised channels as well as the cooperated ARD programme, the public standalone station ZDF, and some private television stations, mainly RTL (owned by Bertelsmann), Sat.1 and Pro7.
Bild is Europe's best-selling newspaper, dominating the German tabloid market. The most important subscription newspapers are Süddeutsche Zeitung and Frankfurter Allgemeine Zeitung, important news magazines are Der Spiegel and Stern.
The German advertising industry grew in 2005 by about 5%, after several years of stagnation. The outlook on 2006 is good, not least because of FIFA World Cup 2006, that is hosted by Germany.
Machinery, Cars & Heavy Industry
BMW; Bosch; DaimlerChrysler; MAN; Porsche; ThyssenKrupp; Volkswagen
High Tech & Fine Mechanics
Deutsche Telekom; SAP; Siemens
Chemical Industry and Pharmaceuticals
BASF; Bayer; Beiersdorf; Degussa; Henkel; Merck
Tourism
Fair universities trade; Lufthansa; TUI
Financial Services
Allianz; Commerzbank; Deutsche Bank; Dresdner Bank; Munich Re
Trade
The United States is Germany's second-largest trading partner, and U.S.-German trade has continued to grow strongly. Two-way trade in goods and services totalled $88 billion in 2000. U.S. exports to Germany were $29.2 billion while U.S. imports from Germany were twice as high, $58.7 billion. At $29.5 billion, the U.S. trade deficit with Germany is the United States' fourth-largest, after the People's Republic of China, Japan, and Canada. Major U.S. export categories include aircraft, electrical equipment, telecommunications equipment, data processing equipment, and motor vehicles and parts. German export sales are concentrated in motor vehicles, machinery, chemicals, and heavy electrical equipment. Much bilateral trade is intra-industry or intra-firm.
Aldi; Deutsche Post; Lidl; Metro
Investments
Germany follows a liberal policy toward foreign investment. From 1995 to 1999, annual average flows of U.S. direct investment in Germany were $3.4 billion, while those of German investors in the United States reached $21 billion. Americans accounted for 18% of all foreign direct investment in Germany during 1998-99, the third-largest source after France and the UK. In terms of cumulative position (historical cost basis), German investment in the United States was valued at $111 billion in 1999, having more than doubled since 1995, while U.S. investment in Germany was worth just under $50 billion, having grown just 12% since 1995.
Despite persistence of structural rigidities in the labour market and extensive government regulation, the economy remains strong and internationally competitive, not least because of its highly skilled work force. Although production costs are high, Germany is still an export powerhouse. Additionally, Germany is strategically placed to take advantage of the rapidly growing central European countries. The current government has addressed some of the country's structural problems, with important tax, social security, and financial-sector reforms. In the future, Germany faces further fundamental (and perhaps even more sweeping) economic adjustments to boost growth and job creation.
At the start of 2005, the seasonally adjusted number of registered unemployed persons initially showed another sharp increase. The considerable rise in the unemployment figures is largely due to the fact that former recipients of income support who now receive the new class-II unemployment benefit are registered as unemployed. This means that people who used to be numbered among the latent manpower reserve are now shown as registered unemployed persons. In particular, the labour-market statistics now include more unemployed young, older and low-skilled people. The unemployment rate peaked at 12.6% in March 2005, although it has gradually declined since then. Also, There are considerable regional differences in unemployment rates within Germany. The unemployment rate in eastern Germany, at 20.7%, is almost twice as high as the western figure of 10.4%, see: Job mobility portal of the European Union.
Other statistics
Investment (gross fixed): 17.6% of GDP (2004)
Household income or consumption by percentage share:
- lowest 10%: 3.6%
- highest 10%: 25.1% (1997)
Distribution of family income - Gini index: 28.3 (2000)
Agriculture - products: potatoes, wheat, barley, sugar beets, fruit, cabbages; cattle, pigs, poultry
Industrial production growth rate: 2.2% (2004 est.)
Electricity:
- production: 560 TWh (2003)
- consumption: 519.5 TWh (2003)
- exports: 53.8 TWh (2003)
- imports: 45.8 TWh (2003)
Electricity - production by source:
- fossil fuel: 61.8%
- hydro: 4.2%
- other: 4.1% (2001)
- nuclear: 29.9%
Oil:
- production: 74,100 barrel/day (2003)
- consumption: 2.891 million barrel/day (2003)
- exports: 12,990 barrel/day (2003)
- imports: 2.135 million barrel/day (2003)
- proved reserves: 395.8 million barrel (1 January 2004)
Natural gas:
- production: 21 billion m³ (2003)
- consumption: 99.55 billion m³ (2003)
- exports: 7.731 billion m³ (2003)
- imports: 85.02 billion m³ (2003)
- proved reserves: 293 billion m³ (1 January 2004)
Private financial assets: €4.07 trillion (2004)
Exports - commodities: machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles
Imports - commodities: machinery, vehicles, chemicals, foodstuffs, textiles, metals
Reserves of foreign exchange & gold: $96.84 billion (2003)
Debt - external: NA
Economic aid - donor: ODA, $5.6 billion (1998)
Exchange rates:
- July 2005: 1.20 USD = 1 EUR
- January 2000: 0.99 USD = 1 EUR
- 1999: 0.94 USD = 1 EUR
- January 1999 1.69 USD = 1 DEM
- 1998 1 USD = 1.76 DEM
- 1997 1 USD = 1.73 DEM
- 1996 1 USD = 1.50 DEM
- 1995 1 USD = 1.43 DEM
See also
External links
The content of this page is retrieved from http://en.wikipedia.org/wiki/Economy_of_Germany under GFDL
