Why is the German economy so strong?

Exports are not everything – seven factors for Germany’s economic strength.

Ready for export: cars wait for shipping in Emden.
Ready for export: cars wait for shipping in Emden. dpa

1. The important role of industry

In Germany the share of industry in gross value added is 22.9 per cent, making it the highest among the G7 countries. The strongest sectors are vehicle construction, electrical industry, engineering and chemical industry.

2. High export quota

Together with China and the USA, Germany is one of the three largest exporting nations. In 2017 Germany exported goods worth 1,278.9 billion euros. The export quota was almost 40 per cent, and over 50 per cent in industry.

3. Open economy

Judging by the importance of foreign trade for gross domestic product (GDP), Germany is the most open economy among the G7 states. The foreign trade quota is currently 84.4 per cent – that’s the sum of imports and exports in relation to GDP. In comparison, the USA quota is 26.7 per cent.

4. High performing medium-sized enterprise

Medium-sized enterprises form the heart of the German economy. In other words, companies with an annual turnover of less than 50 million euros and less than 500 employees. This sector of the economy embraces 99.6 per cent of German companies. More than 1,000 of these companies are so-called hidden champions, i.e. often publicly less well-known international market leaders.

5. Best trade fair location

Germany is the world’s premier location for organizing international trade fairs. Two-thirds of the major global industrial events take place in Germany. Ten million visitors attend around 150 international trade fairs and exhibitions each year.

6. Strong economic centres

The most important economic centres in Germany are the metropolitan regions of Munich (high tech), Stuttgart (vehicle construction), Rhine-Neckar (chemicals, IT), Frankfurt am Main (finance) and Hamburg (port, aircraft construction, media). Berlin/Brandenburg is the strongest start-up region.

7. Good employment rate

Germany is approaching full employment. In June 2018 the number of unemployed people totalled 2.2 million. This is the lowest level since reunification. The largest German employers are Volkswagen (642,000 employees worldwide), Deutsche Post (519,000), Robert Bosch (402,000), Schwarz-Gruppe (retail, 400,000) and Siemens (372,000).

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