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Country Snapshot: Business Overview

Germany ranks as the world’s fifth-largest economy based on purchasing power parity, and its export-driven economy has grown faster than the eurozone average. Nevertheless, the weakness of its export-driven economic model showed in the 2008-2009 recession, when demand for its industrial products initially suffered a steep decline.

With weak agricultural and services sectors, the country needs to look at increasing domestic consumption for its industrial output if it is to avoid future economic slumps. Pressures on the country’s social welfare system due to an aging populace shadow the outlook for long-term economic growth.  The economy has proved resilient so far in the face of these challenges; the nation’s deficit and budget surplus have decreased. The gradual phasing out of nuclear energy power should accelerate the growth of the renewable energies sector.

Major Industries

Germany is well known for its engineering prowess, and the country’s wide array of engineering-driven industrial activities reflects this. These include car-manufacturing; mechanical, electrical, and precision engineering; chemical manufacturing; environmental technology; optics; medical technology; biotech and genetic engineering; nanotechnology; aerospace; and logistics. All told, these industries account for about 27 percent of the country’s GDP.

The country’s chief agricultural products—corn, wheat, potatoes, sugar, beets, barley, hops, viticulture, forestry, and fisheries—account for less than 1 percent of the country’s GDP. The domestic consumption of beer, once synonymous with Germany, has declined with the rise of younger, health-conscious consumers. German beer accounts for over 10 percent of the global market.

Trade Overview

France leads the list of top export partners at 9 percent, followed by the US, the UK, the Netherlands, China, Italy, Austria, Belgium, and Switzerland. Germany’s largest exports are machinery, motor vehicles, electrical products, chemicals and pharmaceutical products. 

The Netherlands holds the largest share of the import market at 13 percent. Other importers include France, China, Belgium, Italy, the UK, Austria, the US, Switzerland, and Poland. The country imports electrical products, machinery, petroleum products, agricultural products, oil and gas, and motor vehicles.

Foreign Investment

The German government actively encourages foreign investment. Key sectors for foreign direct investment have included holding companies, retail, credit and banking, and chemicals. Foreign and domestic investors receive equal treatment under German law. Licenses are required to do business in the areas of some financial transactions, passenger transport, and real estate. No permanent controls on foreign investments exist, nor do restrictions on repatriation of profits apply.

Transparency (Rule of Law)

Germany ranks 12th of 177 countries in the Transparency International Corruption Perceptions Index, which suggests that corruption in the country is minimal. Germany strictly enforces its anti-corruption laws, and the country has ratified the Organization for Economic Co-operation and Development (OECD) Anti-Bribery Convention.

Regulatory Environment (Ease of Doing Business)

Germany stands at 21st of 189 countries in ease of starting a business, according to World Bank findings. Starting a business requires about 15 days, involves 9 procedures, and costs 5 percent of the country’s per capita income.