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Germany – Economic Background

reichstag_berlin_flagFrom the middle of the 19th Century, Germany became one on the world leaders in industrial production. This reputation continues right through to today. Historically rich in natural resources such as coal and iron ore, mining of coal has dramatically reduced since reunification, while mining of ore has all but ceased. In terms of more modern natural resources, there are only small reserves of gas and oil in Northern Germany, with most raw materials now being imported.

West Germany’s so called economic miracle began in 1948, after the devastation of World War 2. The combination of growth and stability made West Germany’s economic model one of the most respected throughout the world. At the same time East Germany became the principal supplier of advanced industrial goods to the communist countries.

Following the official reunification of Germany on 3rd October 1990, a number of issues became apparent about former East Germany, including the level environmental devastation, the extent of technological backwardness, the low productivity and unreliable manufacturing facilities. The above factors, combined with other economic issues, dramatically slowed the Germany economy. Throughout the decade after reunification, the German Economy had one of the lowest rates of growth in Western Europe.

The economy of today’s Germany needs little or no introduction. It is the largest economy in Europe, within the top 5 largest in the world when measured by GDP and is also one of the largest exporters in the world. In 2016, Germany recorded a record trade surplus of 252.9 billion euros. Its economy is forecast to grow at a higher pace that other European countries, inflation remains low and unemployment also low at circa 3.6% (Nov’17). It is the backbone of the European economy and the euro currency. It is expected to remain so for the foreseeable future.