Germany is one of the world’s leading industrial nations with companies in virtually every industry. In the mid-2010s, the manufacturing industry accounted for around a quarter of gross domestic product (GDP). Despite several well-known multinational companies, the country’s many small and medium-sized companies are the backbone of the economy.
According to experts, Germany has an unusually high proportion of medium-sized companies in the manufacturing industry, which is the world leader in its fields. The small and medium-sized family businesses, which are mainly located in the western parts of the country, have considerably more employees than the large companies overall. By mid-2010, around 7 million people were employed in the industry.
In the east, the old state-owned large companies have in most cases been closed down, but well-known companies in the west such as car manufacturers Volkswagen, Daimler and BMW has instead invested in new factories in the eastern parts of the country. Around Dresden, Jena, Leipzig, Leuna and Berlin-Brandenburg, a number of new companies have emerged in various high-tech industries. The GDR (East Germany) had unilaterally invested in heavy industry and energy production. The fact that prices and production volumes were determined through political decisions led to erroneous investments and that unprofitable industries were kept under arms. Only a small proportion of East German companies could continue with profitable production since the introduction of a market economy in 1990. Some of these were taken over by entrepreneurs from western Germany, while more than 3,000 were bought by their staff.
Until the 1960s, coal, iron and steel production, especially in the Ruhr area, were the most important industries. Today, the automotive industry has the largest turnover and largest share of exports. By the mid-2010s, the car industry accounted for 4 percent of GDP. The fact that car companies have established production in several Central European countries, which has contributed to growth over the last 15 years. Machine and tool manufacturing, the chemical industry (including the big company BASF) and the electrical and electronic industry (with companies such as Siemens) are also important industrial sectors.
- COUNTRYAAH: List of top trading partners of Germany. Includes countries that imported most shipments from and exported most goods to the country.
In Baden-Württemberg and Bavaria, a large number of high-tech companies grew during the 1980s. There are also many prominent research institutes. Large resources are allocated for research and development (R&D), as much as EUR 80 billion in 2015.
In the first decades after the Second World War, the term “Deutschland AG” (AB Germany) was used, which meant that most large companies owned shares in other large companies; an extensive cross-ownership. Since the late 1990s, major changes have taken place and foreign owners now have a majority in several of the largest companies.
The construction sector grew rapidly after 1989. Firstly, housing in the west was needed for Germans who arrived from countries in Central Europe and then from eastern Germany, and partly the intensive renovation of infrastructure and construction of new properties. In the mid-1990s, construction declined due to the abolition of heavy subsidies. During the 2000s, the construction sector again grew after major investments in renovations and maintenance of already existing buildings.
Exports are of great importance for German economic development. Industry and business are largely focused on exports, but at the same time the country is also dependent on imports of important raw materials such as energy. Germany is the world’s third largest trading nation after the US and China.
German export companies have been able to benefit greatly from the economic reconstruction in Central and Eastern Europe during the 1990s and later by growing economies such as China, India, Brazil and Russia, where demand has been high for factory equipment, advanced machinery and motor vehicles. The strong demand for German goods from the emerging economies outweighed reduced exports to euro area countries in connection with the debt crisis at the beginning of the 2010s. However, around the middle of the decade, the slowdown in growth rates in China led to a decline in German exports. At the same time, demand from the EU countries increased instead.
Although imports have also increased, Germany has for many years usually shown strong surpluses in the trade balance – in 2015 it was higher than ever.
FACTS – FOREIGN TRADE
US $ 1,527,055 million (2018)
US $ 1,264,613 million (2018)
US $ 291,199 million (2018)
Commodity trade’s share of GDP
71 percent (2018)
Main export goods
vehicles and other workshop products, chemical products, electronics, household appliances
Largest trading partner
France, USA, Netherlands, UK, China, Italy
Merkel releases resistance to crisis funds for euro area countries
At the EU summit in Brussels, Chancellor Merkel agrees to a treaty amendment that opens a new permanent crisis fund for the euro countries. Merkel, after hearing a sharp wording, says that the crisis fund may only be used as a last resort to stabilize crisis economies among euro area countries.
New decision on nuclear power
The Bundestag decides to extend the life of the country’s 17 nuclear reactors by an average of 12 years to 2034. Previously, Germany has decided to discontinue its nuclear power by 2022. At the same time, the decision is made to allocate three billion euros a year to research on renewable energy. Nearly 40,000 people are demonstrating in Berlin against the decision and the opposition declares that it will tear up the decision in a fall victory in 2013.
The government decides on austerity packages
About € 80 billion will be saved in the state budget until 2014.
New union president is elected
The government’s candidate Christian Wulff is elected new president of the Confederation (see Political system) after three rounds of elections. Wulff wins in the third round with 625 votes against 494 for opposition candidate Joachim Gauck.
President Horst Köhler resigns
He has been criticized after a statement during a visit to Afghanistan in which he said that military efforts may be necessary to defend German economic interests. Several critics felt that the statement violated the Constitution’s restrictions on the German military’s actions.
The Bundestag approves participation in the rescue fund
Germany could be forced to contribute € 148 billion in emergency loans to crisis-hit euro countries through its participation in the eurozone stability package of € 750 billion.
New leader for the Left
15th of May
Left founder Oskar Lafontaine leaves the post as party leader with Lothar Bisky. New leader duo will be Gesine Lötzsch and Klaus Ernst. (15/5)
The government loses majority in the Federal Council
CDU and FDF lose power to the left opposition in the state election in North Rhine-Westphalia. The Green Party doubles its voter support. The loss of the CDU and FDP means that the Federal Government Coalition in Berlin no longer has a majority of the mandate of the Federal Council.
German grant to save Greece
The Bundestag approves that Germany contributes one fifth of the EU and IMF rescue packages to Greece totaling € 110 billion.