Economic Environment

Economy

Germany is Europe's largest economy. It is an affluent and technologically powerful economy that produces almost one fifth of the European Union's (EU) total GDP. The economy follows free market principles with a significant degree of government regulation and generous social welfare programs and protections. The state plays a role in the economy, providing subsidies to certain sectors and by retaining ownership of some segments of the economy, while promoting competition and free enterprise.

With the highest gross domestic product and the largest number of inhabitants in the European Union, it is the most important market in Europe. In global trading of goods and services, the Federal Republic of Germany is in second place after the USA.

Economic life in Germany is more international in nature than in most other major industrial nations. One in three euros in Germany is generated through exports; nearly one in four jobs depends on exports.

Germany’s great competitive strength internationally is illustrated most clearly in its high level of and rapidly growing merchandise exports. The rise in direct investments in Germany by international companies also underlines the good position of the German economy.


Industrialization

German industry is very diversified and in many sectors it is a global leader.

The most important branch of the economic activity in Germany, with traditionally a very high share of total economic production, is industry. The 49,000 German industrial undertakings employ nearly 6.4 million staff. Together they generate turnover of more than 1.3 trillion euros. 98 per cent of all German industrial undertakings are small or medium-sized companies (SMEs) with 500 or fewer staff.



Germany is the world’s third largest automobile producer, with more than 70 percent of vehicles produced here intended for export. Machine and plant construction, in which most German industrial undertakings are involved, is also of outstanding international importance.

Germany is also a world leader in the chemical industry. Furthermore, among Germany’s most innovative sectors with above average growth rates are those of technologies for the use of renewable energies as well as information technology and bio-technology.