Economic studies


Population 83.1 million
GDP per capita 46,473 US$
Country risk assessment
Business Climate
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major macro economic indicators

  2018 2019 2020 (e) 2021 (f)
GDP growth (%) 1.1 1.1 -4.6 3.1
Inflation (yearly average, %) 1.7 1.5 0.5 3.1
Budget balance (% GDP) 1.8 1.5 -4.1 -7.3
Current account balance (% GDP) 7.8 7.4 6.9 8.9
Public debt (% GDP) 61.6 59.2 69.1 71.0

(e): Estimate (f): Forecast


  • Strong industrial base (24% of GDP, 2019)
  • Low structural unemployment; well-developed apprenticeship system
  • Importance of family-owned exporting SMEs (Mittelstand)
  • Relatively low private household debt (96% of disposable income, 2019)
  • Institutional system promoting representativeness


  • Decline in the working population from 2020 onwards, despite immigration
  • Low bank profitability
  • Prominence of the automotive and mechanical industries, particularly in exports (33% of GDP in 2019)
  • Capacity constraints, insufficient investment (especially in internet accessibility) and venture capital limit productivity gains
  • Eastern Länder still lagging behind, although the gap is closing

Risk assessment

Bumpy recovery after a strong recession

For 2021, a recovery is expected after a historic recession in 2020. However, depending on the development of the COVID-19 pandemic, the recovery will turn out bumpy. The year already started with a negative sign. With the arrival of the second wave in late autumn 2020, the country went again into a hard-lockdown with closed non-essential shops, closed restaurants, cafés and bars, closed schools, harsh gathering limitations, and the introduction of a night-curfew. The first measures started in November 2020, with stricter rules coming in December. Partially lifted in March 2021, they were tightened again when another COVID-wave came. The strict lockdown ended in late May with a gradual opening in June. Accordingly, the economy decreased again noticeably in the first quarter of 2021. The fall in activity, however, was not comparable with the situation in spring 2020. The people and companies have adapted. Private households ordered more via online-shops and the new hygienic protocols were already implemented in factories, which could therefore keep functioning. In addition, the strong demand for German products from China and the U.S. helped to cushion the GDP decrease. For late spring and the summer, a dynamic economic recovery is expected because of the reopening. The vaccination-process, with 46% of the adult population fully vaccinated at mid-July, has helped further open up the economy. Many Germans will spend their holidays at home again in 2021; Germany having a structural negative tourism-balance, this supported the recovery. Although the outlook for the second half of the year remains generally positive, it will depend on the further spread of the Delta-mutation of the COVID-19 virus and the reaction of the German government to it. The purchasing power is high as unemployment should further decrease, more people should leave the status of furlough, and private savings are on a record high. Many people will have a higher net-income as, for most, the solidarity surcharge (a subsidy for the Eastern Länder, 5.5% of the income tax) is abolished. However, in 2021, the wage growth will turn out smaller than in the last years (1.6% after 2.0% in 2020) and the energy costs will increase (the government introduces prices for CO2-emissions for fuels and gas). In addition, due to the simultaneous economic recovery of many countries all over the world in spring 2021, the strong demand for commodities and raw materials increased, alongside their prices. This translated into a strong increase in consumer prices that could reach up to 4% YoY, the highest level in inflation since 1993. A big support will remain governmental help packages. Several of the measures introduced in 2020 will go on in 2021 like the furlough-scheme (until the end of 2021). Because of the length of the second big lockdown, bridging aids were prolonged until September 2021. At the beginning of the year, EUR 40 billion (1.2% of the GDP) of bridging aid were planned. By mid-July 2021, EUR 29.3 billion had been paid out. Furthermore, almost EUR 69 billion (2.1% of GDP) for investments and public credit-programs will remain in 2021. Additional support will come from the ECB, which extended its asset purchases by EUR 500 billion up to EUR 1850 billion, so that it has enough liquidity to buy assets in an unchanged manner until the end of March 2022.


Another year of a public deficit

As expenditures remain high and tax-revenues will fall, 2021 will see a higher public deficit, the second one after nine years of surpluses. Accordingly, the public debt ratio will remain above the Maastricht-target of 60% of GDP. Germany’s current account surplus, however, should improve strongly. In 2020, the decrease in the goods trade surplus was partly levelled out by a weaker service trade deficit and higher incomes from investments abroad. In 2021, the goods trade surplus should shoot up, due to a strong demand for German goods, while the service deficit will probably remain muted, which should in total increase the current account surplus dynamically.


New government coalition-constellation on the horizon

Chancellor Angela Merkel (CDU) is leading the third Grand Coalition in a row between Conservatives (CDU/CSU) and the Social Democrats (SPD). While at the beginning of the election-campaign, the CDU/CSU could benefit from its successful management of the pandemic, the focus has been put more on the candidates in summer 2021. Angela Merkel will not candidate again, instead Armin Laschet, Prime Minister of North Rhine – Westphalia is taking over, with the CDU/CSU almost constantly leading the polls (29% of the votes in mid-July), although Laschets personal popularity is limited. Chances are very high that the conservatives will form a coalition with the Green party (18%) and maybe even the liberal FDP (12%). It would be the first conservative-green coalition as well as the first coalition containing three parties on a federal level in Germany.


Last updated: August 2021


Bank transfer (Überweisung) remains the most common, means of payment. All leading German banks are connected to the SWIFT network, which enables them to provide a quick and efficient funds transfer service. The SEPA Direct Debit Core Scheme and the SEPA Direct Debit B2B are the newest forms of direct debit.

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 certified cheques, the issuer may cancel payment at any time and on any grounds. In addition, banks are able to reject payments when the issuing account contains insufficient funds. Bounced cheques are fairly common. As a general rule, bills of exchange and cheques are not considered as effective payment instruments, even though they entitle creditors to access a “fast track” procedure for debt collection in case of non-payment.

Debt Collection

Amicable Phase

The amicable collection is an essential step to the success of collection management. The collection process generally begins with the debtor being sent a final demand for payment, via ordinary or registered mail, reminding the debtor of their 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 the due payment date and after receipt of an invoice or equivalent request for payment, unless the parties have agreed to a different payment period in the purchase contract. In addition, the debtor is liable for default interest and reminder fees upon expiry of this period.

Debt collection is recommendable and common practice in Germany.


Legal proceedings
Fast-track proceeding

Provided the claim is undisputed, the creditor may seek order to pay (Mahnbescheid) through a simplified and cost-efficient procedure. The creditor describes the details of their claim and is subsequently able to obtain a writ of execution fairly quickly via the Online-Dunning Service (Mahnportal), direct interfaces or (only for private individuals) pre-printed forms. Such automated and centralised (for each Bundesland, federal state) procedures are available all over Germany.

This type of action falls within the competence of the local court (Amtsgericht) for the region in which the applicant’s residence or business is located. For foreign creditors, the competent court is the Amtsgericht Wedding (in Berlin). Legal representation is not mandatory.

The debtor is given two weeks after notification to pay their debts or to contest the payment order (Widerspruch). If the debtor does not object within this timeframe, the creditor can apply for a writ of execution (Vollstreckungsbescheid).


Ordinary proceedings

During ordinary proceedings, 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 passes 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 the case of partial success, fees and expenses are borne by each party on a pro rata basis.

Ordinary proceedings can take from three months to a year, while claims brought to the federal Supreme Court can reach up to six years.

An appeal (Berufung) may be brought against the decision of the Court of First Instance if the objected amount in dispute exceeds €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”. 

Enforcement of a Legal Decision

Enforcement may commence once a final judgement is made. If debtors fail to respect a judgment, their bank accounts may be closed and/or a local bailiff can proceed with the seizure and sale of their property.

For foreign awards, in order to obtain an exequatur, the creditor needs a notarised German translation of the decision which also has to be recognised, an enforcement order of this judgment, and an execution clause. Judgments of courts of EU member states are recognised without further procedure – unless certain restrictions arising from European law are applicable. 

Insolvency Proceedings

Out-of Court proceedings

Debtors may attempt to renegotiate their debts with their creditors, which helps to protect debtors from early payment requests. However, the procedure is in the creditors’ interest as it can be faster and tends to be less expensive than formal insolvency.



Following a petition filed before insolvency court on the basis of illiquidity or over-indebtedness, the court may open preliminary insolvency proceedings, where it appoints a preliminary administration aimed at exploring the chances of restructuring the company. If the administration authorizes this restructuration, it then initiates formal proceedings and nominates an administrator in charge of continuing the debtor’s business whilst preserving its assets.



Liquidation may be initiated upon demand of either the debtor or the creditor provided that the debtor is unable to settle its debts as they fall due. Once recognized through a liquidation decision and once the company has been removed from the register, the creditors must file their claims with the liquidation administrator within three months of the publication.


Retention of title

This is a written clause in the contract in which the supplier will retain the ownership over the delivered goods until the buyer has made full payment of the price. There are three versions of this retention:

  • simple retention: the supplier will retain the ownership over the goods supplied until full payment is made by the buyer;
  • expanded retention: the retention is expended to further sale of the subsequent goods; the buyer will assign to the initial supplier the claims issued form the resale to a third party;
  • extended retention: the retention is extended to the goods processed into a new product and the initial supplier remains the owner or the co-owner up to the value of his delivery.
Insolvency trend Germany
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