Germany Economy

By | October 18, 2021


According to allcountrylist, the manufacturing industry has continued to lose importance compared to the service sector, both in terms of gross value added and employment. The share of gross value added fell from 52% (1985) to less than 30% (as of 2019: industry: 21.6%; other manufacturing industries 8.2%). The manufacturing and construction industries had a total of 10.3 million employees in 2019. In the 1990s, the construction industry was the driving force behind the economy, especially in the new federal states. The most important industrial sectors are the automotive industry, mechanical engineering, the production of food and animal feed, the chemical industry and metal production and processing. The industry is strongly export-oriented; the export quota is almost half. Typical for Germany, especially in the west, are small and medium-sized, often family-run companies that have a global presence with their products and services and are also market leaders in their field (“hidden champions”).

Natural resources

Germany is poor in raw materials. Exceptions are rich deposits of lignite (third largest economically usable deposit on earth), hard coal and salt (potash, hard and evaporated salt). The largest lignite deposits are located in the Lower Rhine Bay, in the Leipzig Lowland Bay and Lusatia. There are also minable hard coal deposits in the Ruhr area and in the Ibbenbüren area. Further mineral resources are the salt deposits in Lower Saxony, Saxony-Anhalt, Hesse and Thuringia as well as the natural gas deposits in the North German lowlands, in the Upper Rhine lowlands and in the Bavarian Alpine foothills.

As a traditionally important sector, mining has already lost importance in the West German states since the 1960s, in the East German states only after reunification. Lignite is extracted exclusively in open-cast mining and used to generate electricity; As decided by law in July 2020, this is to be discontinued by 2038 at the latest for reasons of climate protection. Underground hard coal mining had long since lost international competitiveness because of the increasingly complex mining conditions and correspondingly high labor costs. The dismantling was nevertheless preserved and subsidized for reasons of energy and regional policy (coal pfennig). After a resolution negotiated between the federal government and the states concerned (2007), it expired completely in several steps by the end of 2018. From the former 148 mines (1950) only two were still in operation at this time.

Energy industry

For primary energy generation, around two thirds of Germany is dependent on imports. However, the total consumption has been falling since 2007, mainly due to savings and more efficient use; In 2019, it was at the level of the early 1970s. The most important primary energy source with a share of just over a third was crude oil, followed by natural gas and coal. The share of nuclear energy has halved since the nuclear phase-out decided in 2000 to around 6% (2019); The last nuclear power plants are to be shut down by 2022. For reasons of climate policy (energy transition), the use of renewable energies is subsidized, especially through the instruments of the Renewable Energy Sources Act (from 2000). In addition, the European emissions trading, in which Germany participates, serves to reduce greenhouse gas emissions. The most important source of renewable energies is wind energy with a share of almost a quarter of electricity generation; In total, renewable energies make up around 40% of German generation, but only 15% of primary energy consumption.

Service sector

In the service sector three quarters are employed all employed persons. The contribution to gross value added is around 70% in 2019. The service sector has steadily gained in importance over the past few decades. Above all, business-oriented services expanded; This can be explained by the externalization of services provided by the industry itself (lean production, focus on core competencies) and by a rapidly increasing demand in globalization (interactions between companies). Internationally operating companies have their head office, research and development services and central consulting and financial services in Germany.

Tourism: With its diverse landscapes, historic cities, numerous palaces, castles and cultural sites, Germany is a popular travel destination for national and international tourism.

The North and Baltic Sea coasts, the Alps, low mountain ranges such as Harz, Thuringian Forest and Black Forest, and the river landscapes of the Danube, Rhine and Main, serve as recreational areas.

In 2019, 406 million overnight stays were counted, a quarter of them in Bavaria. When it comes to city trips, Berlin is the most important, followed by Munich and Hamburg. Most of the foreign tourists come from the Netherlands.


German reunification and European integration, especially the accession of East Central European countries, led to a sharp increase in traffic. With the massive expansion of the infrastructure in the eastern German states, the disadvantages of the location should be eliminated (transport projects for German unity). At the same time, trans-European transport networks are being expanded within the framework of the EU, including the high-speed rail network (ICE®). Motorized traffic with cars and trucks makes up by far the largest share of traffic. The German motorway network At around 13,000 km, it is the second longest in Europe after the Spanish one. Half of the railway network is electrified and therefore suitable for electric locomotives. Rivers and canals play a major role in freight traffic. The largest inland port is Duisburg by a large margin, and Dortmund has the largest German canal port. Of the seaports on the North and Baltic Sea coasts, Hamburg is by far the most important, followed by Bremerhaven, Wilhelmshaven, Rostock and Lübeck.

As a result of the liberalization of EU air traffic, other providers besides Deutsche Lufthansa were able to establish themselves in domestic traffic and in Europe. The major international airlines use a hub-and-spoke (hub) system; large airports serve them as hubs with transfer and reloading functions for national and international traffic. The low-cost airlines, on the other hand, prefer direct connections (city pairs) between cities. In Germany, Frankfurt (Main) Airport has outstanding importance as an international hub; Munich, Düsseldorf and Hamburg as well as Cologne / Bonn fulfill similar functions for air freight. After a long construction period, Berlin Brandenburg Airport (BER) opened on October 31, 2020. In addition, one of the world’s largest data nodes for Internet traffic is located in Frankfurt (Main).

Germany Economy