Germany

After World War II, Germany was separated into the western Federal Republic of Germany (FRG) and the eastern German Democratic Republic (GDR). While FRG pursued Western strategies, the GDR was aligned with the USSR and the Warsaw Pact. FRG and GDR united when the Cold War ended in 1990, and efforts have since been made to increase Eastern productivity and wages. In 1999, Germany, the country with the largest European economy and population, implemented the euro. Lately, Germany has been experiencing a decline in its unemployment rate; this happens at a time when, the economic demand is increasing, German enterprises want to fill more open positions.

Main Airports

Berlin-Tegel (TXL), Frankfurt/M (FRA), Munich (MUC)

U.S. Embassy

Neustaedtische Kirchstrasse 4-5 10117 Berlin
tel: (49 30) 238-5174

Statistics

GDP: purchasing power parity:

$2.504 trillion (2005 est.)

GDP - real growth rate:

0.9% (2005 est.)

GDP - per capita: purchasing power parity:

30,400 (2005 est.)

Inflation rate (consumer prices):

2% (2005 est.)

Labor force:

43.32 million (2005 est.)

Exports:

$1.016 trillion f.o.b. (2005 est.)

Exports - partners:

France 10.1%, US 8.8%, UK 7.9%, Italy 6.9%, Netherlands 6.1%, Belgium 5.6%, Austria 5.4%, Spain 5.1% (2005)

Imports:

$801 billion f.o.b. (2005 est.)

Imports - partners:

France 8.7%, Netherlands 8.5%, US 6.6%, China 6.4%, UK 6.3%, Italy 5.7%, Belgium 5%, Austria 4% (2005)

Population:

82,422,299 (July 2006 est.)

Population growth rate:

-0.02% (2006 est.)

Population Below Poverty Line:

NA%

Major Industries:

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

Employing Workers: 129*

Registering Property: 42*

Enforcing Contracts: 29*

Closing a Business: 28*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Germany	Region
Procedures (number)	9
Time (days)	24

Germany Risk Assessment

Country Rating

Rating: A1

The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behaviour. Corporate default probability is very low on average.

Risk Assessment

Exports and productive investment were the main economic engines again in 2007 with exports holding up well in the face of the euro appreciation against the dollar. They comprise mostly capital goods, high-end cars, and chemical and pharmaceutical products relatively insensitive to price variations. Moreover, 60 per cent go to the European Union with a good proportion of the balance representing sales to emerging countries in Asia and Central and Eastern Europe where demand has remained strong. Expiration of advantageous amortisation rules late last year spurred productive investment. Household consumption and residential construction suffered conversely from the increase in VAT.

A slowdown is expected in 2008 with a smaller positive contribution from foreign trade not offset by the recovery of private consumption. The growth of exports will be slower due to the still unfavourable exchange-rate effect on price-competitiveness and to the economic slowdowns in Europe and the United States. Import growth will remain strong meanwhile reflecting the revival of household demand, buoyed by the continuing decline of unemployment and the concomitant decline in the unemployment-insurance contribution rate as well as by increases in civil service wages, pensions, and aid for the education of children. The revival of private consumption will nonetheless be modest due to the unfavourable effect of the rising cost of credit as well as of energy, and food. Faced with weaker foreign demand, industry will slow the pace of its investments.

Corporate payment behaviour has remained good as evidenced by the excellent level of the Coface payment incident index for Germany and the eight per cent decline in bankruptcies in the first nine months of 2007. The reduction of corporate income tax this year in a context of balanced public finances will have a positive influence on that trend. The residential construction sector will remain mired in difficulty, however, particularly in the eastern regions. And the kitchen furniture sector also presents a high risk profile at this juncture. The automotive sub-contracting sector, meanwhile, has suffered from the increasing pace of relocations to the eastern part of the continent.

STRENGTHS

• Good geographic and sectoral specialisation allied with high competitiveness has generated an ample trade surplus.
• Smaller — mittelstand — companies play a pivotal role in the German economy as regards employment, innovation and competitiveness.
• "Co-determination" of joint-stock companies, mandatory with over 500 employees, has fostered consensus on strategic decisions, particularly involving restructuring.
• Restoring equilibrium to public and social security accounts has given the government more room for manoeuvre.
• The presence of Central and East European countries in the European Union and their geographic proximity have provided companies with sales and production opportunities.

• Marked regional disparities between the traditional economic fabric in the North and the growth-sector focus in the South compound the persistent problem posed by the lagging economies of the eastern Länder (federal states).
• The familial character of mittelstand companies tends to complicate matters in obtaining bank financing that must comply with Basle II transparency rules.
• Despite mergers the banking landscape is still fragmented, which tends to undermine bank profitability.
• The inadequacy of facilities for small children has contributed to the low birth rate and the ageing of the population, which, in turn, have affected consumption.
• The inadequate general education of many youth has led companies to reduce their involvement in the apprenticeship programmes that concern two-thirds of a given age group and has also contributed to a lack of engineers.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation