Germany is an industrialised nation with strong international links and a pronounced export focus. In the annual World Trade Organization (WTO) rankings, Germany regularly places among the three largest exporters behind China and the USA. In 2014, the foreign trade balance closed with a surplus of 190 billion euros, a new record. Exports by German companies (goods and services) increased to 1,326 billion euros, with the value of imports totalling 1,136 billion euros. With the global economy if anything posting low overall growth in 2013-4, the German economy performed well. Compared with other countries, Germany is benefitting most from globalisation. The McKinsey Global Institute “Country Connectedness Index 2014“ lists Germany as the best-networked country worldwide – ahead of the USA and Singapore.
Every second euro earned in Germany is generated through an international business transaction. Almost one job in four is dependent on exports; in industry it is even one in two. Around 800,000 companies engage in foreign trade. In 2014, 685,000 corporations imported goods from other countries, while approximately 340,000 were busy as exporters. Some 10,700 firms domiciled outside Germany played a significant role in German foreign trade; the Association of German Chambers of Commerce and Industry (DIHK) estimates that more than 7 million employees work for German companies abroad.
In terms of exports, the emphasis is on motor vehicles and automotive components, machines, chemical products, and IT appliances and electronic products. These four product groups account for a good half of German exports. Overall, the export ratio has since 1991 almost doubled, rising from 25.7 percent to 50.6 percent. In 2013 the foreign trade ratio, i.e., the sum total of imports and exports in relation to the gross domestic product (GDP), stood at 89 percent. This makes Germany’s economy the “most open” of the G7 countries. By way of comparison, in 2013 the USA had a foreign trade ratio of 30 percent.
The partner countries in the European Union (EU) are the most important market for German goods and attract 58 percent of all exports. France is traditionally Germany’s largest export market, though in the first six months of 2015 the USA headed the list for the first time, followed by Great Britain, the People’s Republic of China and the Netherlands. With regard to imports, however, the rankings run the other way round: In 2014 most imports came from the Netherlands, followed by the People’s Republic of China, France, the USA, and Italy. Although in some cases growth rates are weakening, nevertheless economic and trade relations with Asian countries are becoming ever more important and today 5,000 German companies have investments in China alone.
German direct investments abroad, which since 1990 have increased fivefold to 919 billion euros (2013), are an expression of its strong links within the global economy. A third of the total was invested in Euroland. Conversely, through their stake in local companies, foreign investors are responsible for 3 million jobs in Germany, with the value of foreign direct investments standing at 458 billion euros. This makes Germany the seventh largest destination for investments.
The trade-fair industry is regarded as the hub of world trade. Germany is the leading trade fair centre when it comes to organising and staging international trade fairs. Two thirds of globally important industry events are held in Germany. Every year, 10 million visitors attend around 150 international trade fairs and exhibitions.
At the same time Germany is a transhipment hub for the flow of goods in Europe and the world as a whole. More goods transit through Germany than through any other EU country. About a third of the turnover in the ten most important logistics markets in the EU is generated in Germany, with 3 million people involved in logistics. The Port of Hamburg, where around 9.7 million standard containers are processed each year, is a gateway to the world.
Commitment to fair and free global trade
Germany supports open markets and fair, free trade based on clear and reliable regulations. Among other things, the country pursues these goals with the three pillars for
the promotion of foreign trade. These include 227 German diplomatic missions abroad, 130 German Chambers of Commerce Abroad (AHK), delegations and representative offices of the German economy in 90 countries, and Germany Trade and Invest (GTAI), the economic development agency of the Federal Republic of Germany. They all help small and medium-sized enterprises penetrate new markets and endeavour to improve framework conditions.
Germany is involved in shaping globalisation in various ways, be it through formulating regulations for international trade, regulating financial markets, or managing cash and foreign currency. Given faltering multilateral negotiations (the Doha Development Round), close attention is being paid to bilateral EU free trade agreements. Primarily, extensive treaties with the USA (Transatlantic Trade and Investment Partnership, TTIP) and Japan are currently under negotiation. The EU-Canada Comprehensive Economic and Trade Agreement (CETA) has been freshly negotiated. The EU Free Trade Agreement with South Korea, the first with an Asian country, has been in force since 2011; since that time exports to South Korea have risen each year by some 10 percent. In 2015 the EU and Vietnam adopted a free trade agreement, the first of its kind between the EU and a developing country.