Germany: Economy Overview

The German economy - the fifth largest economy in the world in PPP terms and Europe's largest - began to contract in the second quarter of 2008 as the strong euro, high oil prices, tighter credit markets, and slowing growth abroad took their toll on Germany's export-dependent economy. At just 1% in 2008, GDP growth is expected to be negative in 2009.

Economy Overview

Recent stimulus and lender relief efforts will make demands on Germany's federal budget and undercut plans to balance its budget by 2011. The reforms launched by the former government of Chancellor Gerhard SCHOEDER, deemed necessary due to chronically high unemployment and low average growth, led to strong growth in 2007, while unemployment in 2008 fell below 8%, a new post-reunification low. Germany's aging population, combined with high chronic unemployment, has pushed social security outlays to a level exceeding contributions, but higher government revenues from the cyclical upturn in 2006-07 and a 3% rise in the value-added tax cut Germany's budget deficit to within the EU's 3% debt limit in 2007. The current government of Chancellor Angela MERKEL has initiated other reform measures, such as a gradual increase in the mandatory retirement age from 65 to 67 and measures to increase female participation in the labor market. The modernization and integration of the eastern German economy - where unemployment still exceeds 30% in some municipalities - continues to be a costly long-term process, with annual transfers from west to east amounting to roughly $80 billion. While corporate restructuring and growing capital markets have set strong foundations to help Germany meet the longer-term challenges of European economic integration and globalization, Germany's export-oriented economy has proved a disadvantage in the context of weak global demand.

GDP (purchasing power parity):

$2.918 trillion (2008 est.)
country comparison to the world: 6
$2.889 trillion (2007 est.)
$2.816 trillion (2006 est.)
note: data are in 2008 US dollars

GDP (official exchange rate):

$3.668 trillion (2008 est.)

GDP - real growth rate:

1% (2008 est.)
country comparison to the world: 177
2.6% (2007 est.)
3.2% (2006 est.)

GDP - per capita (PPP):

$35,400 (2008 est.)
country comparison to the world: 34
$35,100 (2007 est.)
$34,200 (2006 est.)
note: data are in 2008 US dollars

GDP - composition by sector:

agriculture: 0.9%
industry: 30.1%
services: 69.1% (2008 est.)

Labor force:

43.6 million (2008 est.)
country comparison to the world: 14

Labor force - by occupation:

agriculture: 2.4%
industry: 29.7%
services: 67.8% (2006 est.)

Unemployment rate:

7.8% (2008 est.)
country comparison to the world: 106
9% (2007 est.)

Investment (gross fixed):

19.2% of GDP (2008 est.)
country comparison to the world: 121

Budget:

revenues: $1.591trillion
expenditures: $1.591 trillion (2008 est.)

Inflation rate (consumer prices):

2.7% (2008 est.)
country comparison to the world: 31
2.3% (2007 est.)

Commercial bank prime lending rate:

NA% (31 December 2008)
country comparison to the world: 133
5.96% (31 December 2007)

Stock of domestic credit:

$4.359 trillion (31 December 2008)
country comparison to the world: 6
$4.457 trillion (31 December 2007)

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:

0.1% (2008 est.)
country comparison to the world: 131

Oil - production:

148,100 bbl/day (2007 est.)
country comparison to the world: 47

Natural gas - production:

17.96 billion cu m (2007 est.)
country comparison to the world: 31

Current account balance:

$263.1 billion (2007 est.)
country comparison to the world: 2
$263.1 billion (2007 est.)

Exports:

$1.498 trillion (2008 est.)
country comparison to the world: 2
$1.35 trillion (2007 est.)

Exports - commodities:

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

Exports - partners:

France 9.7%, US 7.1%, UK 6.7%, Netherlands 6.6%, Italy 6.4%, Austria 5.4%, Belgium 5.2%, Spain 4.4%, Poland 4% (2008)

Imports:

$1.232 trillion (2008 est.)
country comparison to the world: 3
$1.079 trillion (2007 est.)

Imports - commodities:

machinery, vehicles, chemicals, foodstuffs, textiles, metals

Imports - partners:

Netherlands 12.5%, France 8.3%, Belgium 7.5%, China 6.2%, Italy 5.7%, UK 5.4%, Austria 4.3%, Russia 4.2%, US 4.2% (2008)

Debt - external:

$5.25 trillion (31 December 2008)
country comparison to the world: 3
$5.155 trillion (31 December 2007)

Stock of direct foreign investment - at home:

$1.027 trillion (31 December 2008 est.)
country comparison to the world: 5
$1.002 trillion (31 December 2007 est.)

Stock of direct foreign investment - abroad:

$1.407 trillion (2008 est.)

country comparison to the world: 52

$1.249 trillion (31 December 2007 est.)

Exchange rates:

euros (EUR) per US dollar - 0.6827 (2008 est.), 0.7345 (2007), 0.7964 (2006), 0.8041 (2005), 0.8054 (2004)

Source: CIA - The World Factbook