Economy of Germany

By | April 29, 2022

According to cheeroutdoor, Germany is one of the leading industrialized countries in the world, ranking 3rd in the world in terms of GDP production (behind the USA and Japan). The volume of GDP in 2002 amounted to 1,984.2 billion euros (in 1995 prices). Produced GDP per capita – 25,600 euros, per one employed (labor productivity) – 51,300 euros. Disposable income per household is 16,600 euros.

The data testify to the uneven development of economic sectors: the fastest growing segment includes trade, hotel and restaurant business, transport and communications. The share of this sector in the production of GDP increased from 17.5% in 1999 to 18.5% in 2002 (albeit due to communications, not retail, which is stagnating); The worst situation is in construction, and its share has decreased over the same years from 5.5 to 4.5%. A sharp increase in the external economic factor is characteristic – from 0.8% in 1999 to 4.6% in 2002.

The number of enterprises (with an annual turnover of more than 16,617 euros) in 2000 amounted to 2,909,150. In 2000, 600.7 thousand new enterprises were created, and 499.6 thousand were completely liquidated;.3 thousand. Most new firms are created in the field of providing services to enterprises (2001: 121,960) and in retail trade (excluding car trade, including the repair of durable goods) (2001: 107,587). But the majority of firms are liquidated also in these areas, and in retail trade the balance has been negative in recent years (109,663 were liquidated in 2001). The vast majority of newly created firms are small individual enterprises (in 2001: 465,054), followed by limited liability companies (68,478). See major companies

The most important industries are automotive, machine building, chemical, food, electrical. The same industries are leading in German exports. At the same time, the automotive industry (it is also the most important exporter) leads in terms of gross output, and mechanical engineering in terms of net output. Among the manufacturing industries, the highest indicator of the production of newly created value is in the chemical industry, but if we take all manufacturing industries, then the leader in this indicator (as well as in terms of gross product per employee) is energy and water supply.

In the structure of costs in the manufacturing industry, 21.4% is paid for personnel, 41.5% is the cost of materials (including 1.6% for energy), 11.5% for components, etc. ( data for 2000).

Labor productivity is growing unevenly across industries: the greatest dynamics is observed in the production of computers and office equipment, the worst – in the food industry. The level of labor productivity throughout the national economy is high (per employee per year – 51.3 thousand euros, for 1 hour of working time – 36 euros in 1995 prices). However, the dynamics is unsatisfactory: in 2001, GDP production per 1 employed person increased by only 0.1%, in 2002 – by 0.8%, hourly productivity – by 1.0 and 1.2%, respectively.

German agriculture is highly productive, but uncompetitive on the world market due to high costs. It exists due to significant subsidies allocated, incl. and within the framework of the common agricultural policy of the EU. Therefore, in recent years there has been a steady reduction in agricultural areas and the number of agricultural enterprises: in 2001 there were 449 thousand (1995 – 588 thousand, 2000 – 458 thousand). Nevertheless, the production of some types of agricultural products is increasing (cereals, potatoes, vegetables and fruits, pork, eggs).

Railways are of great importance for transport communications in Germany. They are administered by the German Railways JSC, which was established in 1994 and is now in the process of a long-term privatization. At the same time, the railway network has been shrinking over the past 50 years (in 2001, their length was 44.4 thousand km), the share of domestic freight and passenger rail traffic has decreased. Nevertheless, railways transport approx. 2 billion passengers. At the same time, new high-speed lines for ICE trains are being built.

Germany has the largest motorway network after the United States: their length is 11.8 thousand km out of a total interregional road network of 230.8 thousand km. 53.7 million vehicles have been approved for operation in the country, incl. 44.7 million cars and 2.6 million trucks. Road transport transports the vast majority of cargo (2.9 billion tons domestically and abroad) and passengers (7.9 billion people by public transport and 48.4 billion by individual transport).

Germany has one of the most modern and safe fleets in the world. 2/3 of the vessels are less than 10 years old. At the same time, the number of maritime merchant vessels is steadily declining: in 2001 there were 605 of them, while in 1999 – 717. In addition, in 2001 Germany had 102 fishing vessels. Major seaports: Hamburg, Bremen/Bremerhaven, Wilhelmshaven, Lübeck and Rostock.

The total length of the network of federal waterways is approx. 7450 km, almost 5 thousand water transport vessels. Almost the same amount of cargo is transported by inland waterways as by sea transport, and only slightly less than by rail (in 2001, respectively, 236.1 million, 242.2 million and 288.2 million t). The most important internal water artery – r. Rhine, which accounts for approximately 2/3 of river freight traffic (mainly building materials, oil products, ores, scrap metal and coal).

In Germany in 2001 there were 20,174 aircraft (in 1999 – 20,251). Lufthansa is Germany’s leading and one of the world’s leading airlines, carrying more than 45 million passengers a year. The total number of passengers transported by German aircraft in 2002 amounted to 114 million. The largest airport is Frankfurt am Main. Among other international airports: Berlin-Tegel and Berlin-Schönefeld, Dusseldorf, Hamburg, Hannover, Munich, Leipzig.

The length of oil pipelines is 2240 km. Approx. 90 million tons of oil per year.

The telecommunications industry is booming. There are 51 million used telephone lines in the country, more than 55 million mobile phones. Since 1996, the telephone market has been liberalized. JSC “Deutsche Telecom” remains the largest operator. There is tougher competition in the mobile communications market (T-Mobil, Vodafone, E2, etc.). The number of Internet users has grown from 5 million in 1998 to over 32 million in 2002.

Germany has approx. 630,000 trade enterprises with more than 760,000 branches (that is, almost a quarter of all enterprises operating in the economy). The trade employs approx. 4 million people (1.3 million in wholesale, 2.6 million in retail), but nearly half are part-time. Trade turnover in 2000 reached almost 1 trillion euros (610.4 billion in wholesale trade and 321.5 billion in retail), its share in the creation of GDP is approximately 9%.

The largest turnover in retail trade is accounted for by such trading groups as Metro, Reve, Edeka, Aldi, Tengelman.

The share of the service sector in the German economy is steadily increasing, although more slowly than in other developed countries. At the same time, the center of gravity in the development of this sphere is shifting towards services provided to enterprises. Services such as the creation of electronic databases, processing of data arrays, logistics and leasing have emerged and are rapidly developing. So, in 2000, the number of firms providing services mainly for enterprises amounted to almost 238 thousand, they employed 2.4 million people. and their turnover exceeded 176 billion euros.

Tourism is also an important area for Germany. Every year, approx. 12 million tourists. The turnover of the industry is comparable to the turnover of the leading industrial sectors.

During the 1940-50s. in Germany, a system of social market economy was formed as a result of the reforms of L. Erhard, which had a liberal orientation, but with “flank” measures of social protection. The abolition of administrative regulation of the economy, primarily prices, the formation of a competitive environment (including with the help of anti-cartel legislation), the stabilization of the purchasing power of the currency as a result of the monetary reform – all this equally laid the foundation for an effective economic order.

The economic and social policy of Germany over the past 40 years has undergone changes, sometimes significant ones. The first modification of the social market economy occurred in con. 1960s The factors and opportunities for economic growth began to be assessed in a new way, there was a turn in economic policy, in particular, a system for regulating the conjuncture was created. State intervention in economic processes has expanded with the use of neo-Keynesian instruments of budgetary and tax policy. The basis of the new policy was codified in the Promotion of Stability and Economic Growth Act, passed in ser. 1967. At the same time, employers’ unions and trade unions were involved in the process of developing economic and political decisions: within the framework of the “concerted action” introduced by the Stability Law, representatives of employers, trade unions and the state had to coordinate the dynamics of wages and incomes with general economic targets. Finally, for the “orientation” of the national economy, medium-term (rolling five-year) financial (i.e., budgetary) planning was introduced, based on general economic projections. The ideas of “global regulation” are associated primarily with the name of the then Minister of Economics K. Schiller.

Characteristic for the 60-80s. the policy of “fiscal stabilization” is an opportunistic, anti-cyclical policy, which has two interrelated goals: to prevent sharp economic fluctuations in the economy and to promote sustainable economic growth. Elements of the fiscal policy of stabilization, despite the fact that in general its importance has decreased, are still preserved.

However, already in Ser. 1970s “global regulation” has met with setbacks and has actually proven itself to be untenable. Structural reforms were late, and most importantly, government spending and, accordingly, public debt grew uncontrollably. After 1982, a coalition cabinet of the CDU/CSU and the FDP, led by Germansky Kohl, began a major new shift in economic policy. There was a partial return to the original Erhardian model, but taking into account the experience of neo-Keynesian “global regulation” and with separate monetarist elements. The main innovation of economic policy after the change of power in 1982 was the turn from stimulating aggregate demand to a “supply economy”.

After 1998, the federal government tries to combine demand stimulation with supply promotion. The main economic and political directions are the consolidation and rationalization of public finances, the improvement of interbudgetary relations, a significant reduction in taxes and social contributions in the course of the tax reform of 2000–05 and a number of social reforms (the pension reform that has already begun and the planned one in the field of medical insurance), labor market reform and stimulation creation of new jobs, deregulation and debureaucratization, primarily in the field of handicrafts and small businesses, promotion of European integration, etc. A number of functions, such as monetary and foreign trade policy, have been transferred to European bodies, but the German government still uses separate tools to encourage exports.

The monetary and foreign exchange policy in Germany until 1999 was carried out by the Deutsche Bundesbank (established in 1957 instead of the Bank of German Lands, BNZ, created by the Western occupation authorities in 1948). After 1999, the main functions of monetary regulation in connection with the formation of the Economic and Monetary Union were transferred to the European Central Bank (ECB). For 50 years, the German central bank, which had independence from government instructions, saw its main task in maintaining the value of the monetary unit within the country, which was expressed in low inflation. During 1948-96, the German mark depreciated less than any other world currency (during this period, 27.3% of the original value of the German mark remained, while 5.3% of the pound sterling, 6.7% of the French franc, from the Japanese yen – 13.3, from the dollar 15, and even from the Swiss franc – only 23%). Monetary stability was ensured primarily by the independent status of the BNZ, and then the Bundesbank. The Bundesbank is now part of the European System of Central Banks and implements the policies formulated by the ECB.

The ECB was also modeled after the Bundesbank and is also independent of the executive branch. Its task coincides with the task of the Bundesbank – to guarantee the value of money, only now not marks, but the euro. The ECB across the eurozone uses the same regulatory instruments as the Bundesbank (as well as the vast majority of central banks in other countries): changing the discount rate, the policy of required minimum reserves, open market operations (mainly repo transactions), with the latter instrument being the main one.

At the same time, the Bundesbank retains the functions of monitoring the payment turnover and issuing euro banknotes, managing its gold and foreign exchange reserves, and monitoring the activities of banks (along with the control exercised by the Federal Office for Supervision of the Credit System). In addition, it remains the “home bank” of the federal government. The central banks of the states that existed before 1999 have become simple branches (settlement centers) of the Bundesbank.

Credit institutions in Germany are very diverse, but due to the active process of concentration, their number is decreasing every year. If in the 1950s there were almost 14 thousand independent credit institutions, by June 1998 their number had decreased to 3600. In Germany there are 340 commercial banks (including 4 grossbanks – Deutsche Bank, Bayerische Hypo-und Verainsbank, Commerzbank and Dresdner Bank), 13 settlement centres, approx. 600 savings banks (in public law form), 2,400 people’s banks and Raiffeisen banks with more than 16,000 branches (the German Cooperative Bank acts as their parent institution; in addition, there are 3 regional central cooperative banks), 33 mortgage banks and public law mortgage lending institutions, 34 construction savings banks, 18 lending institutions for special transactions (e.g. Creditanstalt für vidraufbau, issuing investment loans, loans to developing countries, export loans). The balance sheet of German banks in 2002 amounted to 6452 billion euros. At the same time, loans were issued to the non-banking sector for 3017 billion euros.

An important place in the financial structure of Germany is occupied by the insurance business. Insurance requirements form the main element of German household wealth accumulation. The main direction is life insurance: in 2002, out of a total investment in insurance of 860 billion euros, life insurance accounted for 593 billion euros. Even savings deposits in banks turned out to be slightly less in 2002 – 586 billion euros. The largest companies in the insurance business are Allianz, Municher Ryuk, the HDI concern, the Ergo insurance group, and the Hannover Ryuk concern.

Financial markets in Germany, despite the rapid development in the last decade and a half, are far behind the American and British ones. In Germany, securities are traded on 8 stock exchanges, the largest of which is in Frankfurt am Main (together with London, it shares 3rd-4th places in the world). However, the vast majority of exchange trading falls on securities with a fixed interest. Trading in company shares is much less developed than in the Anglo-Saxon countries. In 2000, shares were sold for 20.9 billion euros (gross), and fixed interest securities for 659.1 billion euros. In 2002, the gap widened even more: shares were sold for 11.4 billion euros (gross), and fixed interest securities for 818.7 billion euros.

This is explained by the relations between banks and non-financial corporations that have developed in Germany: the latter prefer to finance not by issuing shares and bonds, but by obtaining a loan from their “home” bank, which, in turn, controls the activities of its debtor, having a certain share in it. capital. Such a bank-centrist model of control is devoid of the dynamism inherent in the market-centrist (relying on shareholders) Anglo-Saxon model, but is more stable and cheaper. Nevertheless, in recent years in Germany there has been a tendency towards a wider use of elements characteristic of the Anglo-Saxon financial market.

The share of GDP redistributed by the state rose from 39% in 1969 to 49.8% in 1982 and, after falling to 45.3% in 1989, increased again to 50.1% in 1995. At the same time, public debt increased from DM 126 billion in 1970 to DM 469 billion in 1980. In 2002 it already reached 1253.2 billion euros.

Since 1983, Kohl’s cabinet has held back the growth of spending, not allowing them to increase faster than the growth of production. As a result, the state’s share in the redistribution of GDP, one of the most important indicators of state intervention in the economy, began to decline slowly but steadily. The ratio of public debt to GDP in recent years has been 61-62%.

Since 1997, the German government has been able to consistently reduce the state budget deficit: if in 1996 it was 3.4% of GDP, then in 1997 it dropped to 3.0% (this corresponded to one of the Maastricht criteria, the fulfillment of which was required for entry into the euro area), in 1999 – up to 1.2% of GDP, and in 2000 the budget generally became a surplus. But in 2001-02, the budget deficit began to grow and went beyond the established 3% limit, amounting to 3.7% of GDP.

In the consolidated budget of 2001, revenues amounted to 921.7 billion euros (including federations – 244.6), expenses – 971.3 billion euros (including federations – 265.7). Social insurance spending amounted to 446.9 billion euros.

The main items of budget expenditures (in billion euros): social security (107.4); general services (48.5, including defense – 28.3); general finance, mainly debt servicing (40.0); expenses for economic enterprises and property management (16.3); education, science, culture (11.3); transport and communications (10.3); energy and water supply, industry and services (10.3).

In recent years, the ratio between direct and indirect taxes has changed: in 1989 it was 59.5:40.5, and in 2002 – 47.7:52.3. The main share of tax revenues to the budget is provided by the turnover tax and income tax.

In the 1970s-90s. Germany remained a country with very high taxes and social contributions, and only in 2000 did the reform, calculated until 2005, begin to radically update taxation. The total income tax (corporate tax + solidarity surcharge + trade tax), which exceeded 50% in 2000, was already less than 40% in 2001 (corporate tax on both distributable and undistributed profits is planned to be reduced to 25%). Income tax is also significantly reduced: the maximum rate is reduced from 53% in 1999 to 42% in 2005; the starting rate is also reduced from 22.9% in 1999 to 15% in 2005. Difficulties in 2002 forced the government to postpone tax reform, but then it was decided to return to the old plans and resume it from January 2004.

A high standard of living for the overwhelming majority of the German population during the 10-15 years after the end of World War II was achieved both through constantly rising wages and with the help of a wide social security network. This system of the social market state has become indicative for many countries.

Gradually, however, the social policy of the state became too generous and caring. In addition to the fact that German wages have become one of the highest in the world, additional payments (sick leave from the enterprise, vacation pay, “13th wages”, etc.) have reached a level unsurpassed in the world (in 1995, total labor costs amounted to 45.52 DM per hour, of which DM 20.44 were surcharges; the respective figures were 25.18 and 7.42 for the US, 35.48 and 14.56 for Japan, 20.96 for the UK and 6.0).

Wages in Germany are determined on the basis of sectoral tariff agreements between trade unions and employers’ unions. The wage rates established in the agreements (usually very high) are binding on all enterprises in the industry and affect all employees, regardless of their union membership. The state does not interfere in this process and only monitors compliance with the law (principle of tariff autonomy).

The wage growth index since 1963 has outperformed the cost of living index. Unions have been more restrained in recent years as excessive demands for higher wages threaten more job losses. Nevertheless, the growth of wages continues, overtaking, as a rule, the rate of inflation. At the same time, there is a significant differentiation not only between the western and eastern lands, but also between men and women.

The total income for a family of 3 is on average 3098 euros throughout Germany. Of these, 702 euros go to pay for housing, 368 euros for food, drinks and tobacco products, and 359 euros for transport. The family saves 13.2% of income. There are on average 57 personal computers, 99 phones, 70 mobile phones, 74 cars, 78 bicycles, 96 TVs, almost 100 refrigerators, 96 washing machines per 100 households.

A positive factor for the stability of the standard of living of the population is the low growth in prices for consumer goods and services. True, the introduction of the euro into cash circulation on January 1, 2002 caused a certain surge in prices (especially for services), but it turned out to be short-lived, and in general for 2002 inflation was below 1.5%.

The biggest and still unresolved socio-economic problem that exists in a united Germany is high and persistent unemployment. It was not only the result of unification, more than 2 million unemployed became a constant phenomenon in Germany from the middle. 1980s In the 1990s it grew annually by 200-300 thousand, and to it was added more than a million unemployed in the new federal states.

In the most unfavorable 1997, the number of employed in Germany decreased by more than 400 thousand, incl. in West Germany – by 300 thousand. Only the number of registered unemployed in average annual terms in Germany as a whole was approx. 4.4 million people (more than 3 million in the west), or 11.4% of the able-bodied population (in the west – 9.9%, in the east – 17.4%). At least 2 million more were hidden unemployment. In the beginning. 2003, this record level was surpassed: in February, the number of unemployed was 4.7 million people, or St. 12% of the working population.

The Agenda 2010 reform program put forward by Chancellor Schroeder in the spring of 2003 provides for radical changes in the labor market, in particular, reducing the amount and timing of unemployment benefits, simplifying layoffs of workers, and decentralizing the conclusion of tariff agreements.

The German economy is closely linked to the world market: exports are one of the most important factors in economic growth. As a result, the German economy reacts painfully to the downturns in the global economic situation. Therefore, the export of German products is experiencing strong fluctuations: if in 1999 it grew by 5.6%, then in 2000 – by 13.7%, and in 2002 – by only 2.9%.

In 2002, exports of goods amounted to 648.3 billion euros, and imports – 522.1 billion euros. The main trading partners of Germany: France, USA, Great Britain, the Netherlands, Italy. These 5 countries accounted for 41% of German trade, with France alone accounting for more than 10%. Germany is the main trading partner for the Russian Federation, accounting for 11% of Russian trade. But in the German trade turnover, the Russian Federation has only 2% (1.8% in German exports and 2.5% in imports).

The main articles of German exports are cars and their parts (19.1%), cars (more than 14%), products of the chemical industry, communications equipment, radio and television sets, electronic components; electrical products; products of the metallurgical industry. The main items of German imports are chemical products (10.6%), automobiles and their parts (10.2%), machinery (7%), communications equipment, radio and television sets, oil and gas.

The current account balance in Germany in recent years is either negative or only slightly above zero. Only in 2002 it turned out to be a record for the last decade: 52.5 billion euros. At the same time, the balance of trade in goods is steadily positive (in 2001 – 95.5 billion euros, in 2002 – 126 billion euros), and the balance of trade in services and current transfers is steadily negative (-47 billion euros in 2001 and -35 billion euros in 2002).

The balance of capital movements is more often negative, although there are exceptions, usually due to one or two large transactions for the acquisition of German companies by foreigners. Thus, in 1999 it amounted to -26.1 billion euros, in 2000 +34.3, and in 2001 again -22.5 billion euros. In 2002, the negative balance of capital movements reached a record: -87.2 billion euros.

Economy of Germany