Your company is already operating in Germany and you would now like to export worldwide?

Skyline cityscape of Frankfurt, Germany during sunny day. Frankfurt Main in a financial capital of Europe Skyline cityscape of Frankfurt, Germany during sunny day. Frankfurt Main in a financial capital of Europe. | © Nikolay N. Antonov - stock.adobe.com

Investment Environment

The German Market - Europe’s Economic Hub

Germany is Europe's best performing economy. Small and medium-sized enterprises drive the market and dynamic trade relationships within Europe and beyond offer plenty of business opportunities.

Germany's economic policies enhance a broad and competitive industrial environment with a strong focus on innovative future technologies. Many small and medium sized enterprises utilize this potential, making them leaders in their respective markets. Across industries large and small, German products are worldwide export hits.According to recent studies, Germany ranks as the top investment location in Europe. Along with its relative economic stability, Germany is the largest domestic market within Europe, creating a large and stable customer base for investors. Germany's integration into the world economy also allows companies to gain and share knowledge, products and employees within a global network.

Current Economic Developments

Despite current developments - including the war in Ukraine, the global energy crunch and the threat of a global economic recession - Germany’s economy remains solid thanks to its robust backbone economy.

Covid-19 impact less severe than forecast

As the year 2022 began, a number of economic analyses predicted a year of economic recovery and growth. Moderate Covid-19 infection rates allowed the German government to ease most Covid-19 restrictions in early 2022. Overall economic development in Germany is no longer particularly affected by Covid-19 implications.

Effects of the war on Ukraine

European economies have been hit by a severe external shock - the Russian invasion in Ukraine. This has caused a variety of problems, more specifically for energy supply and energy prices in Europe. Together with the recurring shutdown in China, Russia's attack on Ukraine has slowed down global supply chains. These factors have contributed to drive price increases across all sectors and commodity groups across Germany and Europe. Ongoing global uncertainty has weakened demand for industry products.

Stable German economy

Despite this global uncertainty, Germany's economy  can however point to a number of stabilizing factors. Growing domestic and international demand for products and services “Made in Germany,” combined with a robust labor market provided a boost in GDP of 0.8 percent in the first quarter of 2022, returning GDP to pre-pandemic levels. At present, the government is expecting an overall GDP growth of 1.4 percent for the current year.

The discontinuation of most pandemic protection measures has also given previously restricted service providers and the retail sector a strong boost. Private savings, which reached an all-time high during the pandemic, are now reduced creating an ever-growing demand in tourism and leisure as well as the food service sector.

FDI perspectives

Germany’s reputation as a FDI safe haven has helped maintain stability. In 2020 and 2021, Germany received the majority of greenfield projects in Europe and will most probably do so again in 2022.  Please see the results of the GTAI 2021 FDI Report for more information.

Although greenfield investments currently remain volatile, Germany’s reputation as Europe’s most attractive business location has remained intact in recent years.

External factors have limited economic exchange and business activity throughout the world in recent times. However, large investments made by multinational companies in Germany show that the attractiveness of Germany as a business location remains undiminished. Germany continues to be a place for forward-looking investments as significant investments by Tesla and Intel in Germany show.

Biggest Market at the Heart of Europe

Germany is the largest market in Europe. It constitutes 25 percent of Europe's GDP (EU-27) and is home to 19 percent of the total European Union (EU) population.

The German economy is both highly industrialized and diversified – with equal focus placed on services and production.

Share of Total GDP and Population in the European Union 2020
GDP
(in EUR tr)
Share of Total GDP (EU 27)

Population

(in m)

Share of Total Population (EU 27)
Germany3.325%8319%

France

2.3

17%

67

15%

Italy

1.7

12%

60

13%

Spain

1.1

8%

47

11%

Netherlands

0.8

6%

17

4%

Poland

0.5

4%

38

8%

Czech Republic

0.2

2%

11

2%

EU 27

13.3

100%

447

100%

USA

17.1

328

China

12.0

1,398

Japan

4.1

126

UK

2.2

67

Source: Eurostat, World Bank 2021

Key Driver: The Manufacturing Industry

Ten percent of Europe's manufacturing companies are German. They generate more 30 percent of the EU's gross value added in the manufacturing sector alone. In fact, they represent more than one fifth of all of Germany's value added – one of the highest shares in Europe. Increasingly more foreign companies are placing their faith in Germany as an essential location for production sites and are benefiting from the country's excellent business framework and superior productivity rates.

Economic Backbone: Small and Medium-Sized Enterprises

Exports are driven by Germany’s backbone of highly innovative small and medium-sized enterprises (SMEs). These constitute more than 99.3 percent of all companies that employ 55 percent of all employees in Germany. Many of these SMEs are world market leaders in their respective niche segments. Together with internationally leading companies - such as Bayer, BASF, Daimler, Volkswagen, and Siemens to name but a few - they make up Germany’s manufacturing industrial base.

Company Structure in Germany (2019)


Total

SMEs

SME-Share

Number of Companies *

3.56  m

3.54 m

99.3%

Turnover of Companies *

EUR 7,153  bn

EUR 2,353  bn

32.9%

Employed *

35.21 m

19.24  m

54.7 %

Net Value-Added **

60.6 %

Source: Ifm Bonn, 2021

All figures relate to the private sector (commercial business economy and the liberal professions without public sector, NACE Rev. 2 Codes A-N,P-S). Exceptions are marked.
* Figures provided by the business register (NACE Rev. 2 Codes B-N,P-S). Differentiation of SMEs by number of employees and turnover
** Estimates by the IfM Bonn. Basic data: turnover tax statistics (VAT). Differentiation of SMEs by turnover 

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