Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
With a population of 83.2 million, Germany is the largest consumer market in the European Union. The significance of the German marketplace goes well beyond its borders. An enormous volume of trade in Germany is conducted at some of the world’s largest trade events, such as Medica, Hannover Fair, Automechanika, and the ITB Tourism Show, although it should be noted that many trade fairs in 2020 and 2021 were canceled or rescheduled due to the COVID-19 pandemic. Many trade fairs and events are expected to be held in digital or hybrid formats over the next months. The volume of trade, number of consumers, and Germany’s geographic location at the center of the European Union make it a cornerstone around which many U.S. firms seek to build their European and worldwide expansion strategies.
In 2020 and 2021 Germany weathered the COVID-19 pandemic’s devastating economic effects better than any of its EU neighbors thanks in large part to its fiscal space, a large current account surplus (USD 278 billion [EUR 232 billion] in 2020), generous economic stimulus packages, and flexible short-term work schemes that kept unemployment at only 5.7 percent in summer 2021. Projected GDP growth ranged from 3.2 percent to 3.9 percent in 2021 and 4.3 percent to 4.8 percent in 2022, with the most optimistic forecasts predicting full economic recovery by Q3 2021. All forecasts expect continued GDP growth from Q2 2021 onwards, accelerated by the easing of pandemic restrictions and the rebound of the services sector.
Demographic changes and resulting labor shortages, supply chain bottlenecks, burdensome debt especially on the municipal level, high inflation, and higher energy prices due to the phase-out of coal and nuclear energy in favor of renewable sources (“Energy Transition”) are factors that could dampen near-term competitiveness.