Germany is one of the world's most highly developed market economies. It is the world's third largest economy in USD exchange-rate terms, the fifth largest by purchasing power parity (PPP) and the largest economy in Europe.
Recent performance has not been dynamic, however, and the German economy is marked by vulnerability to external shocks, domestic structural problems, and continued difficulties in fueling formerly communist East Germany.
Germans describe their economic system as "social market economy". An extensive array of social services is provided. Although the state intervenes in the economy through the provision of subsidies to selected sectors and the ownership of some segments of the economy, competition and free enterprise are promoted as a matter of government policy.
Trade
The United States is Germany's second-largest trading partner, and U.S.-German trade has continued to grow strongly. Two-way trade in goods and services totalled $88 billion in 2000. U.S. exports to Germany were $29.2 billion while U.S. imports from Germany were twice as high, $58.7 billion. At $29.5 billion, the U.S. trade deficit with Germany is the United States' fourth-largest, after the People's Republic of China, Japan, and Canada. Major U.S. export categories include aircraft, electrical equipment, telecommunications equipment, data processing equipment, and motor vehicles and parts. German export sales are concentrated in motor vehicles, machinery, chemicals, and heavy electrical equipment. Much bilateral trade is intra-industry or intra-firm.
German trade is consistent with the policy of the European Union (EU) to expand trade among the 25 member states and also with the goal of global trade liberalization through the latest Doha Round of the World Trade Organization (WTO). Germany uses its position as the world’s leading merchandise exporter — a fact that partially reflects the strength of the euro — to compensate for subdued domestic demand. German companies derive one-third of their revenues from foreign trade. Therefore, Germany is committed to reducing trade restrictions, whether involving tariffs or non-tariff barriers, and improving the transparency of foreign markets, including access to public works projects. The fact that Germany has exceeded the EU’s Stability and Growth Pact’s 3% limit on the budget deficit as a percentage of gross domestic product every year since 2002 has been an irritant in relations with the rest of the EU.
In 2003 Germany conducted slightly more than half of its trade within the then 15-member EU, followed by, in order of volume, developing countries, Eastern Europe (including countries like Poland that subsequently joined the EU), the United States and Canada, non-EU Europe (Switzerland, Norway, Liechtenstein, and Iceland), and Japan. Increasing emphasis is being placed on trade with Russia and the People's Republic of China. The 2005 Hanover trade fair devoted much of its attention to Germany’s growing economic and trade ties to Russia, particularly in the area of energy. Germany is Russia’s top trade partner. In 2002, the People's Republic of China overtook Japan as Germany’s top trade partner in Asia, and Germany is investing heavily in that rapidly rising economic power.
Exports and imports
In 2003 Germany imported US$601.4 billion of merchandise, while imports of goods and services totaled US$773.4 billion. Principal merchandise imports were motor vehicles (US$64.4 billion), chemical products (US$63.2 billion), machinery (US$41.8 billion), oil and gas (US$39.9 billion), and computers (US$30.5 billion). Germany’s main import partners were France (9.0%), the Netherlands (7.8%), the United States (7.3%), Italy (6.1%), the United Kingdom (6.1%), Belgium (4.9%), China (3.8%), and Austria (3.8%).
In 2003 Germany exported US$748.4 billion of merchandise, while exports of goods and services totaled US$873.3 billion. Principal merchandise exports were motor vehicles (US$145.5 billion), machinery (US$103.0 billion), chemical products (US$92.9 billion), electrical devices (US$36.2 billion), and telecommunications technology (US$35.1 billion). Germany’s main export partners were France (10.6%), the United States (9.3%), the United Kingdom (8.4%), Italy (7.4%), the Netherlands (6.2%), Austria (5.3%), Belgium (5.0%), and Spain (4.9%).
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Friday March 19th 2010
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