Germany Market, German Market

The Federal Republic of Germany is a democratic country and is one of the highly developed market economies of the world. The country adopts a very open approach to international trade and its business activities are spread throughout Eastern and Western Europe. Germany Market is based on the doctrine of “Social Market Economy†or “Soziale Marktwirtschaft†in the German language. This implies that although the state retains the ownership of certain key segments of the economy and subsidies to some sectors are also awarded, competition and free enterprise are promoted as part of the government policy. The German economy is the third-largest economy of the world if measured by exchange rate and is the fifth-largest worldwide if calculated by the Purchasing Power Parity (PPP). The German economy however happens to be the largest economy in the whole of Europe. The economy is one of the eight industrialized countries of the world and a member state of the G-8 group of nations. It also holds the presidency of the European Council and is member of the United Nations as well as the NATO. Being a member of the European Union (EU), its monetary policies are set by the European Central Bank in Frankfurt, Germany.

The German economy is heavily export-oriented and the key industries for the economy would be iron steel, coal, cement, machinery, machine tools, automobiles, electronics, shipbuilding and beverages.

Some of the most prominent markets of the German economy would include:

Manufactured Items: Industry and construction accounted for 29% of the Gross Domestic Product (GDP) in 2003 and employed about 26% of the workforce. The main manufacturing exports for Germany are automobiles and machine tools. With the manufacture of 5.5 million vehicles in 2003, Germany became the third-largest producer of automobiles after the USA and Japan. Some of the best known brands are Daimler-Chrysler, BMW and Mercedes. As in 2003, its main export partners were France, USA, UK, Italy and Netherlands. France occupied the position of the highest export share at 10.6% for the year 2003. The trading patterns for the German economy have changed from trade with the EU countries to the developing nations in the recent years. Other important exports for the German economy would include chemical products, telecommunications and electrical devices.

Financial Services: The German financial system is bank-oriented rather than dependent on the stock-market. Banking has been successful in the country due to the reason that there has no real separation between commercial and investment banking. Instead there is a system called the universal banking where the banks offer a wide range of services from lending to trading in securities to insurance. In case of the stock markets which are now competing for influence, the Deutsche Borse (German Stock Exchange) is the most important. It is a private corporation and is responsible for managing eight stock markets of which the largest is the Frankfurt Stock Exchange which handles about 90% of all securities traded in Germany. The shares of around 84 companies now trade on the exchanges. The leading index on the Frankfurt Stock Exchange is the DAX. There is also an electronic trading platform known as Xetra.

Labour market: One of the burning problems for the German economy is the relatively high degree of unemployment of labour. In 2005, the unemployment rate increased to about 12% for the first quarter period. In 2004, the sectoral distribution of the workforce was 2.2% in agriculture, 26.4% in industry and 71.35 in the service sector. Germany’s national unemployment rate is only partially comparable with that in the USA and UK where there is a significant portion of part-time labour who work less than 15 hours a week.