Economic analysis


Population 82.1 million
GDP per capita 40,952 US$
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major macro economic indicators

  2014 2015  2016(f) 2017(f)
GDP growth (%) 1.6 1.7 1.8 1.6
Inflation (yearly average) (%) 0.8 0.1 0.4 1.4
Budget balance (% GDP) 0.3 0.7 0.6 0.4
Current account balance (% GDP) 7.5 8.5 9.0 8.6
Public debt (% GDP) 74.9 71.2 68.0 66.0


(f) Forecast


  • Solid industrial base (1/4 of GDP)
  • Low structural unemployment and well-developed system of apprenticeships
  • Geographic diversification of exports
  • Good competitiveness
  • Importance of family-owned exporting SMEs (Mittelstand)
  • Integration of Central and Eastern Europe in productive process
  • Importance of the ports of Hamburg, Bremerhaven and Kiel
  • Institutional system promoting representativeness and consensus


  • Ageing infrastructure
  • Demographic decline partially offset by immigration
  • Shortage of engineers and venture capital
  • Highly dependent on world, especially European, markets
  • Prominence of automotive and mechanical engineering industries
  • Persistent but reducing backwardness of eastern Länder
  • Weak productivity of services

Risk assessment

Moderate growth driven by consumption

Growth is moderate and expected to be slightly lower 2017. Household consumption will confirm its role as the primary contributor, and will be sustained by a steady rise in employment, which could reach 400,000 new jobs, especially in social services and health. Many of the jobs will be filled by people from the European Union and, to a smaller extent, by those from countries in crisis, as well as by more women and older people, compensating for the natural demographic deficit. Despite the probable return of modest inflation, real disposable incomes will grow as wages rise due to the shortage of skilled labour, a rise in the minimum wage and an increase in basic and child tax allowances. Public consumption will slow with a drop in the number of refugees taken in, but public investment in social housing and infrastructure will continue. The construction of private homes will continue to grow strongly. In contrast, business investment in equipment and buildings will pick up very gradually, despite the high rate of production capacity utilisation, against a background of uncertainties over Brexit and sluggish exports (automobiles, chemicals, pharmaceuticals, optical instruments, machinery, electronics, electrical equipment, agricultural machines). These sectors face challenges from the convalescent emerging markets (23% of outlets excluding China), sluggish Chinese investment (6%) and European demand (60%), as well as uncertainties regarding North America (10%). Given the much stronger import growth connected with lively domestic demand and the stabilisation of trade terms, trade's contribution to growth will at best be nil. In this environment, German businesses' payment behaviour will remain generally good. The number of insolvencies will fall by 5.6% (after a drop of 5.4% in 2016), but the businesses at risk (and their liabilities) will be bigger. Some sectors will continue to be riskier than average: agriculture, slaughterhouses, electricity providers, metallurgy, publishing, construction, food and domestic appliances retail, and distance selling.


Public and external accounts in surplus

Despite slight fiscal loosening, against a background of tax relief for households, higher pension obligations, higher spending on transport, energy and early childhood services, which are not offset by the reduced debt service burden (zero interest rate on 10-year Bunds, negative on shorter maturities) and lower unemployment (4.3% in late 2016), the public balance will continue to show a small surplus. The maintenance of a significant primary surplus (i.e. excluding debt interest) and of a positive differential between growth and the average interest rate will result in another reduction in the debt burden.

Although slightly lower, the current account balance will remain broadly in surplus thanks to a massive trade surplus (more than 8% of GDP). The balance of services will post a slight deficit (1% in 2015), with the tourism deficit exceeding the positive balance for financial and IT services, royalties and services to businesses. The income balance is expected to remain in surplus (0.8% of GDP), with income from investments abroad, which are increasing due to recurring current surpluses, exceeding remittances sent by émigrés and investors to the countries of origin.


A popular Chancellor despite criticisms of her immigration policy

Chancellor Angela Merkel (Christian Democrat, CDU), in power since 2005 and at the head of a grand coalition government since September 2013, with Sigmar Gabriel (Social Democrat, SPD) as Vice Chancellor and Minister of the Economy, will stand again at the next parliamentary elections in Autumn 2017. Criticised by those to her right represented by the Bavarian CSU and elements of the CDU, as well as by a large proportion of the population, for opening the borders to refugees (about 900,000 recorded in 2015), and faced with the refusal of other European countries to share the burden, the Chancellor tempered her position and in November 2015, concluded an agreement with Turkey on behalf of her European partners to stem the flow of migrants.


The good macroeconomic situation does not rule out problems

Despite immigration, the ageing population is putting pressure on the economically active population, while female participation in the labour market is hampered by the lack of childcare facilities. It is therefore essential to integrate the refugees in the labour market. The shortage of engineers and researchers is inhibiting innovation - a consequence of there being fewer students in higher education, many having been lured away by apprenticeships. The funding of the transition from 25% to 80% renewable energy by 2050, the phasing out of nuclear power by 2022 and modernisation of coal-fired power stations are controversial measures, The electricity transmission system does not allow optimal exchanges between the north, where wind potential exists, and the south, where solar energy is produced, leading to loss of capacity. Lack of both public and private investment explains these difficulties.


Last update : January 2017




Bills of exchange and cheques are not used very widely in Germany as payment instruments. For Germans, a bill of exchange implies a critical financial position or distrust in the supplier.


Cheques are not considered as payment as such but as a "payment attempt". As German law ignores the principle of covered cheques, the issuer may cancel payment at any time and on any grounds. In fact, the banks are not obliged to cash cheque in case of insufficient funds in the account. Bounced cheques are fairly common.


As a general rule, bills of exchange and cheques do not seem to be effective payment instruments even though they entitle creditors to access a "fast track" procedure for debt collection in case of non-payment.


Bank transfer (Überweisung), by contrast, remains the prevalent means of payment. All leading German banks are connected to the SWIFT network (the Single European Payment Area was introduced on 1 February 2014), which enables them to provide a quick and efficient funds transfer service.


Debt collection



According to the German Civil Code (BGB) the standard limitation period is three years and starts at the end of the year in which the claim arose. Accounts receivable therefore generally become statute-barred on 31 December of a year. Exception: The limitation period for invoices related to transport contracts starts from the date of the actual delivery and the respective claims are statute-barred after a period between six months and one year.


The collection process generally begins with the debtor being sent a final demand for payment, via ordinary or registered mail, reminding the debtor of its payment obligations.


According to the "Law for the acceleration of due payments" (Gesetz zur Beschleunigung fälliger Zahlungen)a debtor is deemed to be in default if a debt remains unpaid within 30 days of payment becoming due and receipt of an invoice or equivalent request for payment, unless the parties have agreed a payment period in the purchase contract. In addition, the debtor is liable to default interest and reminder fees upon expiry of this period.


The benchmark interest rate is the Bundesbank's six-monthly base rate, calculated by reference to the European Central Bank's refinancing rate, plus nine percentage points for retailers or commercial companies and five percentage points for consumers (non-commercial).


If payment or an out-of-court settlement are not forthcoming despite this approach, the creditor may initiate legal action.


Provided the claim is undisputed, the creditor may seek order to pay (Mahnbescheid) through a simplified and cost-efficient procedure whereby the particulars of the claim are set out and result in a writ of execution fairly quickly, by the use of the Online-Dunning Service (Mahnportal), direct interfaces or (only for private individuals) pre-printed forms. Such automated and centralized (for each Bundesland) procedure is available all over Germany.


This type of action falls within the competence of the local court (Amtsgericht) where the applicant has its place of residence or business. For any foreign creditor, the competent court is the Amtsgericht Wedding (in Berlin). Representation by a lawyer is not mandatory.


The debtor is given two weeks after notification to pay up or to object to the order to pay (Widerspruch). In case the debtor does not object within the timeframe the creditor can apply for a writ of execution (Vollstreckungsbescheid).


In case the debtor objects, the creditor can only file a suit in order to obtain a court decision. During this lawsuit the court may instruct the parties or their lawyers to substantiate their claim, which the court alone is then authorised to assess. Each litigant is also requested to submit a pleading memorandum outlining their expectations, within the specified time limit.


Once the claim has been properly examined, a public hearing is held at which the court hands down an informed judgement (begründetes Urteil).


The losing party will customarily bear all court costs including the lawyer’s fees of the winning party to the extent that those fees are in conformity with the Official Fees Schedule (the Rechtanwaltsvergütungsgesetz / RVG). In case of partial success, the fees and expenses will be borne by each party on a pro rata basis.


The reform of civil procedure, enacted on 1 January 2002, is designed to provide all German citizens with a more transparent, timely and effective application of the law. The court must ensure that the procedure leads to a prompt and fair decision.


The new measures encourage parties to attempt conciliation before resorting to legal action and give the local courts (Amtsgerichte) stronger powers. They also require the majority of cases to be settled in the first instance, either through an out-of-court settlement or through a court decision.


An appeal (Berufung) may be brought against decision of the Court of First Instance if the objected amount in dispute exceeds EUR 600. An appeal will also be admitted by the Court of First Instance if a case involves a question of principle or necessitates revision of the law in order to ensure “consistent jurisprudence”.

Insolvency trend Germany 2014
Payment incident index Germany 2014
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