UNIVERSITY OF LJUBLJANA

FACULTY OF SOCIAL SCIENCES

Azimjon Barakaev

Germany

Country Profile

International Economic Relations

Ljubljana, 2023
 For the data from the graphs is retrieved from the same source as the most relevant
data, which is given above every graph in brackets.
1. COUNTRY SIZE
Population (2022): "Approximately 84,36 million". Relatively low population growth largely
attributed to factors such as an aging population, declining birth rates, and moderate levels
of immigration. Dropped in 2011 due to changes in data collection methods. (Statista, n.d.)

GDP (2022): "$4.25 trillion USD": GDP growth reflects a mix of expansion, challenges
(2008-09 and 2020), and resilience, solidifying its global economic prominence.(Satista, n.d.)

GDP per capita (2022): "$50,712 USD":steady growth ( beside 2008 & 2020)(Satista, n.d.)
 2. INTERNATIONAL TRADE:
a. Trade Volume (2022):
Exports: "$1.743 trillion USD": has experienced a substantive expansion in export volume,
dropped 2008 & 2020 due the crises, expansion started 2002 due € (Statista, n.d.)

Exports as share of GDP: High level of exports relative to its GDP (Statista, n.d.)

Imports: "$1.649 trillion USD":notable increase (Statista, n.d.)

Exports and Imports (Statista, n.d.)

Share of GDP: Import (27%) (World Bank, n.d.)

Trade Balance and Current Account Balance (2010-2022): (World Bank, n.d.)
"Positive, with a surplus averaging $200 billion USD annually"
Current Account Balance: "Generally positive, reflecting Germany's export-oriented
economy"

Current Account Balance as a share of GDP: (World Bank, n.d.)

 b. Structure of Trade (2014):
Geographical Breakdown:
2012: Main partners are EU countries, U.S., and China (Statista, n.d.)

2022: Main Partners are U.S. (3% growth), EU, China (2% growth) (Statista, n.d.)

Main Importing Partners:

2012: China, EU countries and U.S. (Statista, n.d.)
2022: China (7% growth), EU countries, U.S. (Statista, n.d.)

Top Export Products: "Vehicles, machinery, chemicals" (Statista, n.d.)

Top Import Products: "Machinery, vehicles, electronics" (Statista, n.d.)

 3. INTERNATIONAL INVESTMENT – FOREIGN DIRECT INVESTMENT (FDI):
FDI Flows and Net Investment Position (2013-2023)
FDI Inflows: "Varied, averaging around $50 billion USD annually (World Bank, n.d.)

FDI outflows: Significant (World Bank n.d.)

Net Investment Position: "Germany is a net outward investor"

„In the second quarter of 2023, the German net international investment position
(i.i.p.) increased by €8 billion to €2.7 trillion; that equates to 69% of gross domestic
product (GDP). German claims on non-residents now stand at €12.5 trillion.“
(Bundesbank)
Top Investors and Destinations:
Top Investors are U.S.,Switzerland and U.K.

Germany Trade & Invest, Regional Development Agencies, 2023https://www.gtai.de/en/invest/business-location-germany/foreign-direct-investment

Top Destinations are U.S., Luxembourg, United Kingdom and China.

Deutsche Bundesbank, https://www.bundesbank.de/en/press/press-releases/german-foreign-direct-investment-in-2021-2022-903736

 4. TRADE AND GROWTH, BUSINESS CYCLES:
Relation Between Export Growth and GDP Growth (2002-2022):
"Generally positive correlation, indicating that export growth contributes to GDP growth"

(Statistics Kingdom: calculation and illustration of Pearson r

https://www.statskingdom.com/correlation-calculator.html
Data from World Bank)
Pearson r = 0.9771 (almost 1)
Very high positive connection between Germany's GDP growth and export growth.
This strong correlation implies that as the economy expands, there is a significant
simultaneous increase in export activities.

FDI Inflows and GDP Growth

The calculated Pearson correlation coefficient of approximately -0.2202 suggests a weak

negative correlation between Germany's GDP growth and foreign direct investment
(FDI) flows, indicating that as one variable increases, the other tends to decrease, though
the relationship is not strongly pronounced.
 5. TRADE IN VALUE-ADDED AND GLOBAL VALUE CHAINS:
Participation in Global Value Chains (GVC):
"High participation, particularly in automotive and manufacturing industries"
Forward and Backward Participation: Strong presence in both stages of the value chain
- consistent increase in its integration within Global Value Chains (GVCs) since 2005,
marked by a rise in foreign value added in exports, stable forward and backward
participation, and a shift towards medium and high-tech industries, contributing to
positive employment and social outcomes.

OECD (2022[2]), "Trade in value added", OECD Statistics on Trade in Value Added (database), https://doi.org/10.1787/data-00648-en
China has become a significant contributor to value added in German exports, growing from
USD 7.8 billion in 2000 to USD 77.7 billion in 2018

OECD (2021[11]), OECD SME and Entrepreneurship Outlook 2021, OECD Publishing, Paris, https://doi.org/10.1787/97a5bbfe-en, based on OECD (2021), “Global value chains: Efficiency and risks in the context of COVID-19”, OECD Policy
Responses to Coronavirus (COVID-19) Paper. OECD calculations based on OECD (2018) Inter-Country Input-Output (ICIO) database http://www.oecd.org/sti/ind/inter-country-input-output-tables.htm.
Key industries for value-added trade include road vehicles, machinery, transport goods,
chemicals, and services, with a notable shift towards increased export orientation across
most German industries between 2008 and 2018

OECD (2022[2]), "Trade in value added", OECD Statistics on Trade in Value Added (database), https://doi.org/10.1787/data-00648-en

6. Examine how Germany's trade has been affected by sanctions due to the war in
Ukraine.
The war in Ukraine has disrupted German trade by causing supply chain interruptions,
impacting economic ties with Russia, prompting energy strategy shifts, and contributing to an
overall economic strain. 'According to Marcel Fratzscher, head of the German Institute for
Economic Research (DIW), the war in Ukraine cost the German economy about €100 billion
($107 billion), or about 2.5% of its GDP' (Nia 2023). Consequently, Germany has entered a
period of economic recession, with GDP growth in 2023 by minus 0,3% (European
Commission). Additionally, amidst these challenges, Germany has experienced a population
increase of approximately 1 million people. As a result of the Ukraine war, energy prices
have surged, leading to an increase in inflation. To mitigate the consequences, the
government has incurred debts. In summary, the escalation of energy prices, coupled with a
rise in inflation, has necessitated increased government borrowing.

7. SUM UP A COUNTRY POSITION IN GLOBAL TRADE:

Germany upholds a resilient, export-oriented economy, boasting a trade surplus and a

positive current account balance. Its pivotal role in global value chains, notably in automotive
and machinery sectors, is underscored by substantial FDI outflows, reflecting a robust
economic standing. To sustain this position, policies should prioritize support for
export-oriented industries, foster innovation, and strengthen global economic partnerships.
Additionally, Germany may benefit from relaxing fiscal constraints and strategically investing,
especially in the energy sector, to ensure the industry's access to affordable energy and
uphold competitiveness. Such measures, besides mitigating the impacts of the Ukraine war,
can propel Germany toward a transition to green energy.
References:

● World Bank. (2022). World Development Indicators 2022.

https://databank.worldbank.org/reports.aspx?source=world-development-indicators
● Trading Economics. (2022). Germany GDP.
https://tradingeconomics.com/germany/gdp
● Statista. (2022). Germany: Population.
https://www.statista.com/statistics/270001/distribution-of-age-groups-in-germany/
● Statistisches Bundesamt. (24. November, 2023). Bruttoinlandsprodukt (BIP) in
Deutschland von 1991 bis 2022 (in Milliarden Euro) [Graph]. In Statista. Zugriff am
19. Dezember 2023, von
https://de.statista.com/statistik/daten/studie/1251/umfrage/entwicklung-des-bruttoi
nlandsprodukts-seit-dem-jahr-1991/
● Deutsche Bundesbank Behörde
https://www.bundesbank.de/en/statistics/external-sector/international-investment-position
-and-external-debt/international-investment-position-776554

● World integrated trade solution

https://wits.worldbank.org/CountryProfile/en/Country/DEU/Year/2012/TradeFlow/Expo
rt
● OECD Reviews of Innovation Policy: Germany 2022: Building Agility for Successful
Transitions
https://www.oecd-ilibrary.org/sites/32cbaedf-en/index.html?itemId=/content/compone
nt/32cbaedf-en
● Towfigh Nia, O. (2023, 24. Februar). How Ukraine war has changed Germany:
Germans paying enormous economic price but 'special military operation' leads to
seismic policy shifts. Anadolu Ajansı.
https://www.aa.com.tr/en/europe/1-year-on-how-ukraine-war-has-changed-germany/
2828955
● European Commission: Economic forecast for Germany
https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/germany
/economic-forecast-germany_en