Europe’s biggest economy
Germany has a strong and diverse economy that is driven by exports and innovation. It is the largest economy in the European Union and the fourth largest economy in the world ($4.0 trillion in 2022).
Germany is known for its highly skilled labour force, strong industrial base, and large service sector.
The country is a major exporter of goods and services, with a particular focus on automobiles, machinery, and electrical equipment. Germany is also home to many large multinational corporations, including BMW, Mercedes-Benz, Siemens, and Volkswagen.
Germany’s economy is highly industrialized, with a strong focus on research and development. The country has a well-developed infrastructure, with a highly efficient transportation system and a strong digital infrastructure.
Germany has a stable and efficient financial system, with a well-regarded regulatory environment. The country has a relatively low level of public debt, and its fiscal policies are generally considered to be sound.
Germany’s economy has faced some challenges in recent years, including a slowdown in global trade and a slowdown in the growth of the European Union. However, the country’s strong economic fundamentals and diversified economy have helped it to weather these challenges and maintain its position as a major player in the global economy.
German market - Industries
Germany’s Gross Domestic Product (GDP) is driven by a diverse range of industries. According to data from the World Bank, the largest contributor to Germany’s GDP in 2021 was the service sector, which accounted for approximately 70% of the country’s total economic output. The manufacturing sector was the second largest contributor, accounting for approximately 23% of GDP, while the agriculture, forestry, and fishing sector accounted for a small percentage of GDP.
Some of the key industries in Germany include:
- Automotive: Germany is home to many major automakers, including BMW, Mercedes-Benz, and Volkswagen, and the automotive industry is a major contributor to the country’s economy.
- Engineering: Germany is known for its engineering expertise and is a leading exporter of machinery and equipment.
- Chemicals: Germany is a major producer of chemicals, including pharmaceuticals and specialty chemicals.
- Renewable energy: Germany is a leader in the development and deployment of renewable energy technologies, including wind and solar power.
- Service sector: The service sector is a major contributor to Germany’s economy, with a focus on finance, insurance, and tourism.
Overall, Germany’s economy is highly industrialized and export-driven, with a strong focus on research and development. The country has a well-developed infrastructure, with a highly efficient transportation system and a strong digital infrastructure.
Employment by Industry
According to data from the Federal Employment Agency of Germany, the service sector is the largest employer in the country, accounting for approximately 70% of total employment in 2021. The manufacturing sector was the second largest employer, accounting for approximately 23% of employment, while the agriculture, forestry, and fishing sector accounted for a small percentage of employment.
Some of the key industries in Germany and their approximate share of employment are:
- Service sector: 70%
- Manufacturing: 23%
- Agriculture, forestry, and fishing: 2%
- Construction: 2%
- Wholesale and retail trade: 2%
Germany is known for its highly skilled labor force, with a strong emphasis on vocational training and education.
IT Industry
The IT industry is a significant contributor to Germany’s Gross Domestic Product (GDP). According to data from the Federal Government →, the IT sector accounted for $190 billion (approximately 5% of the country’s GDP) in 2021.
The IT industry in Germany is a significant contributor to the country’s economy and is characterised by a strong focus on innovation and research and development. Germany is home to many large multinational corporations that operate in the IT sector, including SAP, Siemens, and Deutsche Telekom. The country is also home to a number of smaller, innovative startups that are driving technological advancement in areas such as artificial intelligence, the internet of things, and cybersecurity.
The IT sector in Germany is supported by a strong digital infrastructure, with high levels of internet penetration and widespread access to advanced technologies. Germany is also home to a number of leading research institutions and universities that are at the forefront of technological innovation.
Germany’s IT industry is highly export-driven, with a particular focus on the European Union and other markets in the European region. The country is a major exporter of IT services and products, and it is a leader in the development and deployment of advanced technologies.
Overall, the IT industry in Germany plays a key role in the country’s economy and is an important driver of innovation and technological advancement.
Artificial intelligence "Made in Germany"
Self-driving cars, smart homes and voice assistants – intelligent technologies can be found in every sphere of life. AI technologies have become indispensable in Germany. In order to drive this development forward, the Federal Government plans to invest about $5.3 billion in the implementation of a national AI strategy by 2025. The aim of this investment is to make Germany the world’s leading location for AI.
Supplier preferences
When it comes to Maintenance & Development most CIO’s prefer to hire service providers from Germany. Other European countries come second. Few hire services from the USA or Asia (mainly international corporations). A small number wants to deglobalize (proportionally more are moving away from the US than from Asia)
Opportunities
The IT industry in Germany offers a range of opportunities for professionals and businesses. Some of the key opportunities in the German IT industry include:
- Working for large multinational corporations: Germany is home to many large multinational corporations that operate in the IT sector, including SAP, Siemens, and Deutsche Telekom. These companies offer a range of career opportunities for professionals with expertise in areas such as software development, data analysis, and IT consulting.
- Starting a business: Germany has a strong startup ecosystem, and the IT industry is a key area of focus for many new ventures. The country’s strong digital infrastructure and supportive regulatory environment make it an attractive place to start an IT business.
- Participating in research and development: Germany is home to a number of leading research institutions and universities that are at the forefront of technological innovation. There are many opportunities for professionals and businesses to get involved in research and development projects in the IT sector.
- Exporting to international markets: Germany’s IT industry is highly export-driven, and there are many opportunities for businesses to sell their products and services to international markets. The country has strong trading relationships with the European Union and other markets in the European region, and it is a major exporter of IT services and products.
Overall, the IT industry in Germany offers a range of opportunities for professionals and businesses, and it is an important driver of innovation and technological advancement in the country.
Challenges
Like any industry, the IT sector in Germany faces a range of challenges. Some of the key challenges facing the German IT industry include:
- Talent acquisition and retention: The IT industry is highly competitive, and attracting and retaining top talent can be a challenge for companies in Germany. To address this issue, many companies have implemented training and development programs to help employees improve their skills and stay up-to-date with the latest technologies.
- Cybersecurity: The increasing reliance on digital technologies has also increased the risk of cybersecurity threats, and companies in the IT sector must implement robust security measures to protect their systems and data.
- Competition from international markets: Germany’s IT industry is highly export-driven, and it faces competition from other countries with strong IT sectors, such as the United States and India. Companies in Germany must continually innovate and improve their products and services in order to stay competitive in the global market.
- Regulation: The IT industry is subject to a range of regulations, including data protection laws and cybersecurity requirements. Keeping up with these regulations can be a challenge for companies in the sector.
