Germany: Economy Overview

The German economy - the fifth largest economy in the world in PPP terms and Europe's largest - is a leading exporter of machinery, vehicles, chemicals, and household equipment and benefits from a highly skilled labor force.

Economy Overview

Like its western European neighbors, Germany faces significant demographic challenges to sustained long-term growth. Low fertility rates and declining net immigration are increasing pressure on the country's social welfare system and necessitate structural reforms. The modernization and integration of the eastern German economy - where unemployment can exceed 20% in some municipalities - continues to be a costly long-term process, with annual transfers from west to east amounting in 2008 alone to roughly $12 billion. Reforms launched by the government of Chancellor Gerhard SCHROEDER (1998-2005), deemed necessary to address chronically high unemployment and low average growth, contributed to strong growth in 2006 and 2007 and falling unemployment, which in 2008 reached a new post-reunification low of 7.8%. These advances, as well as a government subsidized, reduced working hour scheme, have helped to explain the relatively modest increase in unemployment during Germany's 2008-09 recession - the deepest since World War II. GDP grew just over 1% in 2008 and contracted roughly 5% in 2009. Germany crept out of recession in the second and third quarters of 2009, thanks largely to rebounding manufacturing orders and exports - primarily outside the Euro Zone - and relatively steady consumer demand. The German economy probably will recover to about 1.5% growth for the year 2010. However, a relatively strong euro, tighter credit markets, and an anticipated bump in unemployment could cloud Germany's medium-term recovery prospects. Stimulus and stabilization efforts initiated in 2008 and 2009 and tax cuts introduced in Chancellor Angela MERKEL's second term will increase Germany's record budget deficit, which is expected to exceed 5% of GDP in 2010. The EU has given Germany until 2013 to get its consolidated budget deficit below 3% of GDP. A new constitutional amendment likewise limits the federal government to structural deficits of no more than 0.35% of GDP per annum as of 2016.

GDP (purchasing power parity):

$2.81 trillion (2009 est.)
country comparison to the world: 6
$2.955 trillion (2008 est.)
$2.917 trillion (2007 est.)
note: data are in 2009 US dollars

GDP (official exchange rate):

$3.353 trillion (2009 est.)

GDP - real growth rate:

-4.9% (2009 est.)
country comparison to the world: 185
1.3% (2008 est.)
2.5% (2007 est.)

GDP - per capita (PPP):

$34,100 (2009 est.)
country comparison to the world: 35
$35,900 (2008 est.)
$35,400 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 0.9%
industry: 26.8%
services: 72.3% (2009 est.)

Labor force:

43.5 million (2009 est.)
country comparison to the world: 14

Labor force - by occupation:

agriculture: 2.4%
industry: 29.7%
services: 67.8% (2005 est.)

Unemployment rate:

7.5% (2009 est.)
country comparison to the world: 72
7.3% (2008 est.)
note: this is the International Labor Organization's estimated rate for international comparisons; Germany's Federal Employment Office estimated a seasonally adjusted rate of 10.8%

Investment (gross fixed):

17.9% of GDP (2009 est.)
country comparison to the world: 115

Budget:

revenues: $1.507 trillion
expenditures: $1.618 trillion (2009 est.)

Inflation rate (consumer prices):

0.3% (2009 est.)
country comparison to the world: 19
2.6% (2008 est.)

Commercial bank prime lending rate:

4.96% (31 December 2009)
country comparison to the world: 140
5.97% (31 December 2008)

Stock of domestic credit:

$5.2 trillion (31 December 2009 est.)
country comparison to the world: 5
$5.019 trillion (31 December 2008 est.)

Agriculture - products:

potatoes, wheat, barley, sugar beets, fruit, cabbages; cattle, pigs, poultry

Industries:

among the world's largest and most technologically advanced producers of iron, steel, coal, cement, chemicals, machinery, cehicles, machine tools, electronics, food and beverages, shipbuilding, textiles

Industrial production growth rate:

-11% (2009 est.)
country comparison to the world: 157

Oil - production:

156,800 bbl/day (2009 est.)
country comparison to the world: 44

Natural gas - production:

15.29 billion cu m (2009 est.)
country comparison to the world: 34

Current account balance:

$135.1 billion (2009 est.)
country comparison to the world: 2
$243.9 billion (2008 est.)

Exports:

$1.159 trillion (2009 est.)
country comparison to the world: 3
$1.498 trillion (2008 est.)

Exports - commodities:

machinery, vehicles, chemicals, metals and manufactures, foodstuffs, textiles

Exports - partners:

France 10.2%, US 6.7%, Netherlands 6.7%, UK 6.6%, Italy 6.3%, Austria 6%, China 4.5%, Switzerland 4.4% (2009)

Imports:

$966.9 trillion (2009 est.)
country comparison to the world: 3
$1.232 trillion (2008 est.)

Imports - commodities:

machinery, vehicles, chemicals, foodstuffs, textiles, metals

Imports - partners:

Netherlands 12.71%, France 8.3%, Belgium 7.19%, China 6.89%, Italy 5.88%, UK 4.76%, Austria 4.55%, US 4.25%, Switzerland 4.07% (2009)

Debt - external:

$5.208 trillion (30 June 2009)
country comparison to the world: 3
$5.158 trillion (31 December 2008)

Stock of direct foreign investment - at home:

$1.008 trillion (31 December 2009 est.)
country comparison to the world: 4
$1.015 trillion (31 December 2008 est.)

Stock of direct foreign investment - abroad:

$1.454 trillion (31 December 2009 est.)
country comparison to the world: 4
$1.419 trillion (31 December 2008 est.)

Exchange rates:

euros (EUR) per US dollar - 0.7338 (2009), 0.6827 (2008), 0.7345 (2007), 0.7964 (2006), 0.8041 (2005)

Source: CIA - The World Factbook