Introduction of Germany economic environment--National-zone--V-Next

Introduction of Germany economic environment

Germany is a sovereign state in central-western Europe. It includes 16 constituent states, covers an area of 357,021 square kilometers, and has a largely temperate seasonal climate. With about 82 million inhabitants, Germany is the most populous member state of the European Union. In the 21st century, Germany is a great power with a strong economy; it has the world's 4th largest economy by nominal GDP, and the 5th largest by PPP. As a global leader in several industrial and technological sectors, it is both the world's third-largest exporter and importer of goods. Significantly, Germany has a social market economy with a highly skilled labour force, a large capital stock, a low level of corruption, and a high level of innovation. The unemployment rate published by Eurostat amounts to 4.7% in January 2015, which is the lowest rate of all 28 EU member states. As a result, Germany has one of the highest labour productivity levels in the world. As a global leader of high-end manufacturing, the modern car, the automotive industry in Germany is regarded as one of the most competitive and innovative in the world, and is the fourth largest by production. The top 10 exports of Germany are vehicles, machinery, chemical goods, electronic products, electrical equipments, pharmaceuticals, transport equipments, basic metals, food products, and rubber and plastics. It is noteworthy that Germany is recognized for its large portion of specialized small and medium enterprises, known as the Mittelstand model. More than 1,000 of these companies are global market leaders in their segment and are labelled hidden champions. Berlin developed a thriving, cosmopolitan hub for startup companies and became a leading location for venture capital funded firms in the European Union. This provides a great opportunity for global investors and SMEs to develop their businesses. In foreign trade aspect, the German government looks at development of bilateral relations from a strategic perspective, while China has always put China-German relations on a top priority of its foreign relations. Statistically, Germany is China's biggest trading partner and technology exporter in Europe, and the amount of German investment in China ranks second among European countries, after the United Kingdom. China is Germany's largest trading partner, superseding the United States since 2017.

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Statement of the Delegations of German Industry & Commerce in China on the fifth German- Chinese intergovernmental consultations


On July 9, 2018, high-level political and business representatives from Germany and China will gather for the fifth intergovernmental consultations in Berlin. This kind of consultation meetings are held exclusively between the German and Chinese Governments, which underlines the close and unique partnership between both countries.

Germany and China are closely connected by an economic success story: For the second year in a row, China is Germany's most important trading partner worldwide. With an investment volume of almost 80 billion euros in China, more than 5,000 German companies are currently active and contributed to the development of the country by creating around 1.1 million jobs. Chinese companies are also steadily expanding their presence in Europe and profit from the open German and European markets. The German-Chinese trade volume reached a value of around 187 billion euros in 2017 and accounted for almost 30 percent of total trade volume between the European Union and China. In 2017, German exports to China amounted to around 86 billion euros, with German imports also rising and accounting for around 101 billion euros.

Apart from bilateral agreements, which advance the strategic dialogue on security and foreign policy, the German-Chinese dialogue on the Rule of Law and human rights, as well as the cultural and youth exchange, the parties will also formulate agreements on deepening cooperation in business, trade, investment and innovation. Concurrently, the high-level bilateral 9th German-Chinese Forum for Economic and Technological Cooperation will also take place in Berlin.

The intergovernmental consultations offer a unique opportunity to address the improvement of business conditions of German companies operating in China. “Despite a successful 2017, and an encouraging start of the fiscal year 2018, German companies still face a number of challenges in China“, explains Simone Pohl, Delegate and Chief Representative of Delegation of German Industry and Commerce Shanghai.

Slow cross border internet speed and limited internet access, uncertainty surrounding the Cybersecurity Law, which came into effect in June 2017, insufficient legal certainty and protection of intellectual property rights as well as a shortage of skilled labor remain the biggest challenges for German companies operating in China. In times of digital transformation and large scale industrial initiatives such as "Industrie 4.0" and "Made in China 2025," almost 70% of companies surveyed by the German Chamber of Commerce consider innovations in China, for China, and with China as a business priority. Prerequisites for a sustainable cooperation in this area are common international technical standards, similar IT infrastructures, the protection of trade secrets and the avoidance of unwanted technology transfers.
The Delegations of German Industry and Commerce in China expect the bilateral consultations to address these challenges and identify solutions. "The recently shortened negative list for foreign investment is an important impulse. Nonetheless, enhanced market access and a level playing field must be further advanced alongside an improved regulatory framework", says Pohl. The 5th German-Chinese intergovernmental consultations are convening at a time when it is particularly important to advocate for transparent and reliable rules for Sino-German relations.

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FRANKFURT (Reuters) - The German economy likely regained some of its lost momentum in the second quarter, supported by private consumption, manufacturing and recovering exports, the Bundesbank said in a monthly economic report on Monday. Economic growth unexpectedly halved to a quarterly rate of 0.3 percent in the first three months of the year and economists are still debating whether the slowdown was just a hiccup or signalled the end of a boom in Europe's largest economy. Fears that escalating trade tensions could also weigh on growth has also been impacting investor sentiment and the International Monetary Fund recently warned that the euro zone was facing 'particularly serious' risks that could lead to a hand landing for the economy after a five-year boom. "The economy has likely showed better momentum in the spring than at the start of the year," the Bundesbank said. "Although it is unlikely that the high growth rates of the past year will be repeated, manufacturing was once again the key economic driving force." Pharmaceutical output was particularly strong but car production also increased sharply, even as the output of intermediate goods remained weak, the bank added. Part of the improvement in growth momentum was due to the expiration of one-off factors that held back growth, including an exceptionally disruptive flu season, the Bundesbank added. Household consumption remained a cornerstone of growth while government consumption, which dipped in the early part of the year, also rebounded. "Last but not least, activity in the booming construction sector likely increased significantly, despite capacity constraints," the Bundesbank added.

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Frankfurt am Main, July 16, 2018.10.25 CET — Deutsche Bank (XETRA: DBKGn.DE/NYSE: DB) expects to report income before income taxes (IBIT) of approximately 700 million euros and net income of approximately 400 million euros for the second quarter of 2018. For the first half of 2018, Deutsche Bank expects to report IBIT of approximately 1.15 billion euros. Management believes that these results demonstrate the resilience of the franchise. The results are considerably above the average consensus estimate, as compiled by Deutsche Bank and published on July 11, 2018, triggering an ad hoc announcement in line with BaFin guidelines. The published average of analysts’ estimates is IBIT of 321 million euros and net income of 159 million euros. In the second quarter, group revenues are expected to be approximately 6.6 billion euros, compared to an average consensus estimate of 6.4 billion euros. Group revenues include approximately 3.5 billion euros of revenues in the Corporate & Investment Bank (CIB). Within CIB, revenues include approximately 100 million euros from a gain on an asset sale and debt valuation adjustments reflecting a widening of Deutsche Bank’s credit spreads during the quarter. Compared to the prior year quarter, reported Sales & Trading revenues are expected to decline by approximately 15%, while Origination & Advisory revenues are expected to increase by 2%. Group noninterest expenses are expected to be approximately 5.8 billion euros, compared to a consensus estimate of 6.0 billion euros. Noninterest expenses are expected to include restructuring and severance charges of approximately 0.2 billion euros and a small release of litigation provisions. Restructuring actions have progressed rapidly in the second quarter with headcount down by approximately 1,700 full-time equivalents to slightly above 95,400. Preliminary estimates of the group’s capital ratios as of June 30, 2018 are also higher than consensus expectations. The Common Equity Tier 1 capital ratio is expected to be approximately 13.6%, compared to the average consensus estimate of 13.3%. The fully loaded leverage ratio is forecast to be approximately 3.9%, compared to a 3.7% average consensus expectation. All these amounts are preliminary. Full details of the second quarter results will be disclosed as planned on July 25, 2018.

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Berlin, Germany, is one of the fastest growing startup ecosystems in the world. The country's economy registered strong growth of 2.5 percent last year. The current upswing presents a golden opportunity for bolder action to address the country's medium-term challenges and shape a brighter future, said the IMF in its latest annual assessment of the economy. Here are six things you need to know about this report. 1. Germany's economic momentum is expected to persist in 2018 . Business investment is expected to be dynamic. With strong job growth and unemployment falling to new post-reunification lows, rising wages should provide a boost to private consumption. Higher wage growth and stronger imports would also help bring down Germany's large current account surplus, which stood at 8¼ percent of GDP in 2017. 2. Public finances have improved significantly. The budget surplus rose to 1.2 percent in 2017 - the highest level since reunification. Fiscal surpluses are projected to remain high over the medium term, pushing debt down to 42 percent of GDP by 2023. 3. The strong fiscal position can be used to increase investment in physical, digital, and human capital. Public investment in infrastructure, especially at the municipal levels, can help crowd in private investment and support external rebalancing. New government plans to increase investment in digital infrastructure, especially high-speed nationwide internet connections, are essential to keep Germany's edge as an innovation leader. And with the high probability of an average German job of being lost to automation, investment in life-long learning is key to boosting productivity and long-run growth. 4. Public finances can also be used toboost labor force participation. Germany's workforce will begin shrinking in 2020. Policies to tap into the potential of women, older workers, and migrants can help offset this decline. Expanding childcare and after-school programs would provide greater opportunities for women to pursue full-time employment. Pension and labor market reforms that make it more attractive to stay in the workforce longer can also reduce the need to save and lift growth. 5. Fostering entrepreneurship can raise productivity growth and investment . Germany is an innovation leader, but with a relative weakness in venture capital. The government should encourage the provision of scale-up capital to support startups at the growth stage. New business creation and expansion is essential for technological diffusion and productivity growth. 6. Strong policies are needed to curb financial excesses in the housing market. Rising wages, large immigration flows, and low interest rates are driving up the demand for housing. House prices in Germany's major cities such as Munich, Hamburg and Frankfurt, have risen much faster than in other European Union cities. Lowering the burden on new construction can ease supply constraints, and strengthening the prudential toolkit can help preserve financial stability.

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