From the end of the World War II West Germany’s rapid economic growth made it the most prosperous and stable country in Europe.

West Germans have a higher standard of living than many other European countries.

Germany is a leader in the manufacture of cars, electronic goods and electrical machinery as well as in the metal, chemical and pharmaceutical industries.

Its environmental technology industry has 18% of the world market.

Germany is the world’s second largest exporter, mainly to EU and Asia-Pacific.

The country was once seen as miracle of post-war reconstruction, but now it’s suffering from globalisation, an ageing workforce and labour unrest.

The population demographics have changed significantly since the middle of the 20th century. After the baby boom post World War II, birth rates are now in decline, whilst at the same time life expectancy is increasing providing for an aging population. This has lead to negative population growth in the German population.

The aging population has put pressure on the state pension schemes as there are too few workers for every retired person. Pension policy therefore is a big issue at the moment in Germany and part-private pension schemes have been introduced, however, a final solution for the problem has not yet been found. 

Economic growth has slowed down to a near halt.

The situation hasn’t been helped by the decline in value of the Euro – adopted by Germany in 2002 to replace the Deutsche Mark. However as with any currency, the Euro has since recovered and has been quite strong since then.

The national unemployment average is 11.5% though in eastern Germany it averages 18% and reaches even higher in some cities at 26%.

The high unemployment is caused in part by strict labour laws which control the laying off of workers and the strong position of the labour unions who negotiate set wages on a national basis.

The unification of Germany has brought large economic challenges to the country which it is slowly overcoming. With these difficulties, it is no wonder that the development of Germany’s economy has slowed down

Former Chancellor Schroeder has started making reforms to the social welfare systems to help the economic situation.