Business Opportunities in Germany

The German economy is the world's fourth largest and, after the enlargement of the EU, accounts for more than one-fifth of European Union GDP. Germany is the United States' largest European trading partner and the sixth largest market for U.S. exports. Germany's "social market" economy largely follows free-market principles, but with a considerable degree of government regulation and generous social welfare programs. Germany is the largest consumer market in the European Union with a population of 80.8 million. However, the significance of the German marketplace goes well beyond its borders. An enormous volume of trade is conducted in Germany at some of the world's largest trade events, such as MEDICA, Hannover Fair, Automechanika, and the ITB Tourism Show. The volume of trade, number of consumers, and Germany's geographic location at the center of a 28-member European Union make it a cornerstone around which many U.S. firms seek to build their European and worldwide expansion strategies. The German economy has improved markedly in recent years. The economy took a serious hit during the economic crisis. Because of the country's strong export dependency, GDP declined by more than 5 percent in 2009. However, the V-shaped recovery was equally strong, as pre-crisis real GDP was reached again in the second quarter of 2011. The German government expects real GDP to grow by 1.8% in 2014 and by 2.0% in 2015. The labor market remained resilient during the economic and financial crisis and continued to be strong in 2013. A comprehensive set of labor and social reforms, termed "Agenda 2010," which former Chancellor Gerhard Schr der and his Social Democrat/Greens coalition government introduced between 2003-2005 helped overcome the structural weaknesses of the German welfare state and labor market, resulting in today's strong employment growth and low unemployment. Many experts also credit the government-funded short-time work scheme for limiting unemployment during the economic crisis which allowed companies under considerable economic stress to avoid layoffs by reducing their worker's working time and pay for a limited amount of time. Other factors, such as moderate wage increases, flexibility in bargaining agreements, numerous company-level alliances to retain jobs, and employers' willingness to accept higher unit labor costs, also contributed to the stability of the German labor market.