Population 83.2 million
GDP 51,238 US$
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major macro economic indicators

  2020 2021 2022 (e) 2023 (f)
GDP growth (%) -3.7 2.6 1.8 0.0
Inflation (yearly average, %) 0.5 3.1 6.9 6.2
Budget balance (% GDP) -4.3 -3.7 -2.3 -3.1
Current account balance (% GDP) 7.1 7.7 4.2 4.9
Public debt (% GDP) 68.0 68.6 67.2 65.7

(e): Estimate (f): Forecast


  • Strong industrial base (24% of GDP in 2021)
  • Low structural unemployment; well-developed apprenticeship system
  • Importance of family-owned exporting SMEs (Mittelstand)
  • Consensus-orientated politics, institutional system promoting representativeness


  • Declining working population from 2020 onwards, despite immigration
  • Strong dependence on energy imports (95% of the natural gas consumption was imported in 2021, 39% of all German gas imports came from Russia in early 2022)
  • Prominence of the automotive and mechanical industries, particularly in exports (31% of total exports in 2020)
  • Capacity constraints, insufficient investment (especially in internet accessibility) and venture capital limit productivity gains

Risk assessment

The German economy is muddling through

The German economy is set to stagnate in 2023 as many risks from 2022 have passed over into the current year. Supply chain bottlenecks are one of these risks. Despite these risks having eased markedly overall towards the end of 2022, reciprocal sanctions between EU and Russia will still weigh on inter-European goods trade activity. Moreover, the sharp outbreak of Covid-19 in China at the beginning of 2023 also hampered supply chains. The energy supply, especially of natural gas, represents the most acute supply chain-related risk. Immediately before the explosion at the Nord-Stream I and II pipelines in late September 2022, Russia still held a 35% share of German gas imports. Since then, the volume of total gas imports fell by 38% in spring 2023 compared to spring 2022, and the distribution between supplier countries has changed. The Czech Republic terminated its gas exports to Germany, while the Netherlands, Belgium and, to some extent, Norway extended theirs. In late 2022 and early 2023, the first three floating LNG terminals in Germany were installed, however their import capacity remained very low in spring 2023. Over 2023, another three such LNG terminals should be added, which, by the end of 2023, should provide up to half of the previous Russian gas supply, at which time total German gas imports would still be 16% lower than their pre-war level. Companies and private households have reacted to the scarcity of natural gas. After the price surge, companies increasingly turned to energy efficiency and savings measures, while private households reduced their heating. Except for a few isolated weeks, the mild temperatures helped to reduce gas consumption in December and January by almost 20% compared to the average of the last four years. This has helped keep the gas storage levels very high (64% in late March 2023 compared to 26% at the same time in 2022), thereby avoiding major production reductions or even temporary stoppages in German industry, e.g., in the chemical and steel sectors. Nevertheless, pressure on companies will remain high in 2023. One major aspect in that respect is the higher financing costs that European companies are facing due to the change in European Central Bank (ECB) monetary policy. In 2022, the ECB already increased key interest rates by 250 basis points to 2.50% for its main refinancing rate and hiked by 100 basis points in early 2023. An increase of another 50 basis points is still expected. In addition, monetary policy makers decided to slowly reduce the ECB balance sheet by €15 billion per month starting from March 2023. It is very likely that these planned reductions will increase in the third and fourth quarter of 2023. Furthermore, companies will have to face paying higher wages. On average, late 2022 tariff-wage negotiations resulted in 7% increases spread over one or two stages during 2023-24. In early 2023 higher wage increases of around 10% for one year were demanded by the unions and led to several strikes in the public sector. While a part of these additional company costs may be absorbed by margins, a noticeable share will nonetheless feed through to higher prices. While not as extreme as in 2022, consumer prices are expected to rise further in 2023 to above their average level of the last few years. The situation for households should therefore remain challenging, but will be somewhat remedied by a durably robust savings rate (11.2% in 2022, slightly above the pre-pandemic level) combined with a persistently strong labour market, where employees’ bargaining power has increased due to the shortage of skilled workers. This will support private consumption. Foreign trade should remain subdued in the first half of the year, at least in Western Europe. However, China should slowly recover in the second half of 2023 . Accordingly, global demand for commodities will increase, which will again lead to higher prices in that category, but also to higher demand for German goods.


Public deficit for the fourth consecutive year

In the wake of the energy crisis, the German government has introduced several support measures aimed at private households and energy intensive companies during 2023. The main initiative is a €200 billion package that includes a gas and electricity price cap, which came into effect in March 2023. With the decrease in global energy prices, however, the final costs of these measures could be noticeably lower than expected. In addition, surging inflation, higher turnover and incomes could generate higher tax revenues for the state. Hence, the German public deficit should still remain near to the Maastricht criteria target.

Germany’s current account surplus should increase somewhat. Import prices, driven mainly by energy prices, should decline on average and thus improve the trade of goods surplus. The balances of services (deficit), investment income (surplus) and current transfers (deficit) should see only small changes.


The first three-party governing coalition in German history scrapes by

Chancellor Olaf Scholz (Social Democrat, SPD) is leading the very first federal tripartite coalition in German history comprising the SPD (206 out of 736 seats in Parliament), the environmentalist Greens (118 seats) and the liberal FDP (92 seats). The Russian invasion of Ukraine at the very start of the coalition forced the government parties to shift their political stance, often in direct contrast to their ideology. The Green party, which developed out of the peace and the anti-nuclear movements in the 1980s, was in favour of military support and even opposed direct arms deliveries to Ukraine. Furthermore, the Minister of the Economy Robert Habeck (Greens) visited countries in the Middle East such as Qatar to secure more natural gas supplies for Germany (despite reservations over the handling of human rights in the country). Habeck also shared the decision of Chancellor Scholz to extend the lifetime of nuclear power plants (albeit by only a few months). On the other side of the political spectrum, the liberal Finance Minister Christian Lindner (FDP) announced more support programmes for the population to cope with higher energy prices, funded by increasing public debt, and a cap on gas prices, thereby intervening in the free market. Despite their very pragmatic political style, the coalition parties have lost popular support in the polls. Nevertheless, as all parties seek to compromise and in the absence of alternatives, the coalition seems stable and should hold out until the next election due in September 2025.


Last updated: April 2023


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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