Business in Germany: economic snapshot April 2018 | finder.com

ECONOMIC SNAPSHOT
GERMANY

Internal perspective

The third-largest shareholder of the World Bank, Germany backs international efforts to establish worldwide peace, a stable global economy and renewable energy and environmentally friendly production. Experts forecast continued economic growth despite Germany’s generous refugee policy that could cost upward of $20 million to support.

Population

82,349,400 (2016)

Internet users

84% (2013)

Gross domestic product (GDP)

  • $3.4 trillion (2013)

Top 5 Imports

Top 5 exports

Languages

Top 3 Trading Partners

Top franchises

GDP growth rate (est.)

  • 1.69% in 2015
  • 1.6% in 2014
  • 0.3% in 2013

Trends and outlooks

  • Strong economy due to GDP growth due to government spending and strength of labor market
  • High consumer confidence
  • Highest unemployment rate since Germany’s unification

Economic challenges

  • Stablizing force for the Europe’s debt crisis
  • Facing pressure to limit any future Greek bailouts
  • Open-door refugee policy could strain economy

Introduction

According to 2017 International Monetary Fund data, Germany is the fourth-largest economy based on nominal gross domestic product (GDP), which evaluates market prices, and fifth-largest economy based on purchasing power parity (PPP), which compares the prices of like consumer goods among countries.

With a population of around 83 million, Germany ranks 17th in the world based on both nominal GDP per capita and GDP by PPP per capita. These measures divide nominal GDP and GDP by PPP by the country’s population.

What should I know about nominal GDP and PPP?

Among the multiple ways that economists measure a country’s economic strength, nominal GDP and PPP are two of the most common.

Nominal GDP is based on official government estimates and depends on exchange rates between two countries, typically using the US dollar for one of the denominations. It’s useful for measuring financial flows between countries. But because it doesn’t consider differences in cost of living, it can distort per capita income estimates.

PPP, on the other hand, considers the relative cost of local goods, services and inflation rates — all factors considered to reflect a country’s domestic market. Because PPP compares the costs of a common “basket of goods” — some 3,000 consumer goods that include food, fuel and insurance — it’s considered a more ideal way to project per capita income projections and gauge poverty thresholds.

Economic indicators

Germany is a longtime EU and Eurozone member. Its official currency is the Euro (EUR), the currency fluctuating recently between 0.801 and 0.805 EUR against the US dollar.

Germany is a highly developed country famous for its rapid economic expansion from the post–World War II era onward. It heavily depends on exports to power its economy. The country was the world’s third-largest exporter in 2016, when its $310 billion trade surplus was also the world’s biggest.

Industry accounted for 29% of GDP in 2008. Major industries include automobile production, machinery, electrical equipment and chemicals. Although it was only the world’s fourth-largest automobile producer, Germany led the world in automobile exports in 2009. It has a 90% share of the world’s market for premium automobiles.

Agriculture accounted for less than 1% of GDP in 2010 and employed only 2.4% of the workforce. However, domestic agricultural production is enough to meet 90% of the country’s needs. Potatoes, wheat, barley, sugar beets, fruit and cabbages are Germany’s top agricultural products.

The services sector accounted for almost 69% of GDP in 2010 and employed more than two-thirds of the workforce. The country is a major tourist destination, attracting some 31 million foreign tourists in 2012.

As of 2017, an estimated 5.5% of the population was unemployed.

The 2017 Forbes Global 500 list of top corporations includes 29 German companies, while the 2017 Forbes Global 2000 list of top public companies includes 49 companies headquartered in the country.

Major contributors to the economy

Aside its membership in the EU, Germany is a member of the World Trade Organization and the Organization for Economic Cooperation and Development. Its top trading partners include the US, France and the UK.

The country’s top exports include:

  • Vehicles
  • Machines, engines and pumps
  • Electronic equipment
  • Pharmaceuticals
  • Medical and technical equipment

Its major imports include:

  • Machines, engines and pumps
  • Electronic equipment
  • Vehicles
  • Oil
  • Pharmaceuticals

Economic prospects

Germany is Europe’s largest economy, accounting for 28% of the Eurozone’s total economic output in 2017. The country is also Europe’s largest manufacturing economy.

Germany’s economic transformation after the end of World War II inspired the creation of the term “economic miracle.” Sustained low inflation rates, rapid industrialization and a skilled workforce accustomed to working long hours and at full capacity helped the country’s economic growth post–World War II.

Germany’s economic future remains bright, and it is a major source of international aid for many countries. Challenges it faces in the years ahead include an aging population and a declining birthrate. The government must work to reverse these trends to ensure the workforce remains a viable and potent tool for economic growth.

Sources:
  • https://en.wikipedia.org/wiki/List_of_countries_by_GDP_
    (nominal).
  • https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
  • https://en.wikipedia.org/wiki/List_of_countries_by_GDP
    _nominal_per_capita
  • https://en.wikipedia.org/wiki/List_of_countries_by_GDP
    _PPP_per_capita
  • https://en.wikipedia.org/wiki/Economy_of_Germany
  • https://en.wikipedia.org/wiki/Fortune_Global_500
    #Breakdown_by_country
  • https://www.forbes.com/global2000/list/#country:Germany
  • http://www.worldbank.org/en/country/Germany/overview

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