The German Market with GED

Known globally for their prowess in the production of automobiles, machinery, electrical equipment and chemicals goods, the “Made in Germany” stamp is recognized the world over as a mark of quality. Beyond this, its year on year positive trade balance and persistent low levels of inflation have made Germany something of an economic superstar, and an example to Europe’s struggling economies.

At the GED Project, we use the latest tools and methods to examine reasons behind the rise of this European powerhouse, and consider the global economic dynamics of Germany’s success.

A Look at German Trade

The German market is a social market economy with a highly qualified labour force across all sectors, a well-developed infrastructure, and low levels of corruption. Behind the US and Japan, Germany is the world’s third largest export economy, and Europe’s largest national economy. German trade is dominated by cars at 11 percent, followed by vehicle parts at 4.2 percent and packaged medicaments at 3.7 percent. In addition to this, it is known for high levels of technological innovation. As a result, Germany has an established base of specialized small and medium-sized enterprises, with 99 percent of all German businesses fitting into this model.

Since the start of the 21st century German trade has consistently generated a high surplus. In 2014, the German exports of goods and services totalled at approximately €1.13 trillion, with a positive trade balance of nearly €250 billion in 2015. While domestically this has created jobs for millions of Germans, there are concerns that Germany’s success has been at the expensive of other EU states. In ‘Germany’s export surplus – a blessing or curse?’ we explore the root causes and consequences of Germany’s trade surplus and discuss whether it’s a blessing or a curse, and if so, for who.

Germany’s Trade Agreements

Free trade is a major driver of growth for the world economy, and Germany’s trade is also aided extensively by such agreements. Since the creation of the EU and the elimination of the majority of tariffs, Germany has become a major exporter throughout the region. Two of the country’s top three export destinations are fellow EU member states France (€105 billion) and the UK (€77 billion). Germany’s trade barriers are also at a historic low with the US with which it exports an average of €100 billion worth of goods each year. But in an era of mega-regional trade agreements such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), Germany’s positon as a top exporter could be hanging in the balance. We explore this more in our GED Fact Sheet ‘TTIP, TPP, RCEP… How do Mega Trade Deals affect your Country?’