Economy of Germany
Germany has got the fifth largest economy in the world in terms of Purchasing Power Parity or GDP. As at 2013, the country’s GDP was estimated at $3.227 trillion. Compared to then past performance on terms of PPT, Germany has registered significant economic growth that is approximately 0.5%. The country’s GDP per capita and exchange rates as at 2013 were $39,200 and $3.593 trillion respectively.
Germany is a leading exporter of machinery, household goods, chemicals and vehicles. Besides, it also enjoys a highly skilled labor force that is a great boost to its industries. However, it also faces various demographic challenges just like other Western European countries. As a result of these challenges, the country has not been able to experience a sustained long-term growth. The country’s social welfare system has been placed under increased pressure by the low fertility rates and the decreasing net immigration. This has necessitated structural reforms by the government.
The reforms that the government launched in the period between years 1998 to 2005 were seen to be necessary in addressing the high rates of unemployment, low average growth have been instrumental in lowering the unemployment and even enhancing strong growth. These reforms as well as other subsidies by the government were successful through the reduction of the working hour scheme. Even though there was a modest increase in unemployment between years 2008 to 2009, it was not as a result of the reforms, instead, the recession that occurred during that period. That was the worst since World War II. In 2013, there was a significant change since the unemployment rate plunged by up to 5.3%.
In 2008 and 2009, Chancellor Angela Merkel made stimulus and stabilization efforts and even tax cuts that went a long way towards increasing Germany’s total budget deficits. In 2010, the country’s total budget deficit had increased to 4.1%. However, reduced spending and high tax revenues significantly lowered the deficit to 0.8% in 2011. In the following year, Germany registered a budget surplus of 0.1%.
Even though a constitutional amendment that was approved in 2009 places a limitation on the federal government 
with regards to structural deficits of not more than 0.35% of GDP annually beginning 2016, the target had already been achieved way back in 2012. In order to enhance economic stability, the new German government introduced a minimum wage policy that is tied at $11 per hour. The minimum wage policy is expected to take effect as from 2015.
70% of Germany’s total GDP comes from the service sector while industry and agriculture follow at 29.1% and 0.9% respectively. Most of the nation’s products are from the engineering sector and include machinery, automobiles, chemical and metals. Besides, Germany is the leading producer of solar power technology and wind turbines globally. However, the country is relatively poor in raw materials. Besides, the country also imports almost two thirds of the energy that is consumed locally.
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