The German Economy

The post-unification German economy has collectively been being built up, step-by-step, and is heading towards an economically strong nation. Former West German regions contain high-income populations while the former East German regions are still on the path towards development. It is believed that a decade from now both regions will be at an equal level of development.

One important milestone in the history of the German economy was the signing of the Bretton Woods agreement in July 1944, around the same time the IMF was created. The Federal Republic of Germany has always played an important role in bringing forth-new changes and management styles to the global monetary system.

In later years, when there was a surplus in dollars on the international markets, there were several nations, including West Germany, that were not ready for their currencies to be revaluated according to the Bretton Woods agreements. These disagreements led to the extinction of the Bretton Agreement in August 1971.

Following unification, the German economy grew stronger than it was before. One-third of the German economy is based on exports. Exports have always played a major role in the German economy and have been an important aspect in strengthening the national economy.
Germany, along with other European Union countries, has been active in bringing the new European currency, the Euro, into existence. Germany has been a strict follower of the policies drafted by European Union members and has its own economic and commercial policies in accordance with regulations drafted by the European Union.

The service industry is the major driver behind the German economy today. It is believed to be responsible for approximately two-thirds of the GDP. Major services driving the German economy include financial, commercial, real estate, hospitality and transportation services.

Financial services in Germany have been an important part of business, because the country has a Universal banking system where banks play different roles, such as security trading, lending money, insurance, mutual funds, etc. This has made the financial system more bank- oriented than stock market-oriented. Almost 90% of Germany’s banks are Universal

The German stock exchange is a private entity managing the eight stock markets of Germany. There are stock markets in Germany located in Berlin, Bremen, Dusseldorf, Hamburg, Hanover, Frankfurt, Munich and Stuttgart. Of these, the Frankfurt stock exchange is the biggest, handling almost 90% of the securities trade in Germany.

The hospitality service industry is also a major contributor to the GDP, because there are several international trade fairs, seminars, sports contests, etc. which are organized and take place in Germany. These attractions bring in almost 50 million tourists from different locations, thus creating big business for the hospitality industry.