Economic Analysis


Population 83.2 million
GDP per capita 51,238 US$
Country risk assessment
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major macro economic indicators

  2020 2021 2022 (e) 2023 (p)
GDP growth (%) -3.7 2.6 1.9 0.2
Inflation (yearly average, %) 0.5 3.1 7.9 4.5
Budget balance (% GDP) -4.3 -3.7 -2.2 -3.1
Current account balance (% GDP) 7.0 7.4 3.8 4.7
Public debt (% GDP) 68.0 68.6 65.5 65.3

(e): Estimate (f): Forecast


  • Strong industrial base (24% of GDP, 2021)
  • Low structural unemployment; well-developed apprenticeship system
  • Importance of family-owned exporting SMEs (Mittelstand)
  • Resilient private household debt (99% of net disposable income, 57.6% of GDI, 2020)
  • Consensus orientated politics, institutional system promoting representativeness


  • Declining working population from 2020 onwards, despite immigration
  • Low bank profitability
  • Strong dependence on international energy imports (e.g. 39% of all German gas imports come from Russia)
  • Prominence of the automotive and mechanical industries, particularly in exports (30% of total exports in 2020)
  • Capacity constraints, insufficient investment (especially in internet accessibility) and venture capital limit productivity gains

Risk assessment

War in Ukraine leads to surging inflation and thwarts the economic recovery

The war in Ukraine, and the resulting EU sanctions against Russia and Belarus, substantially changed the outlook for the German economy in 2022. Although direct trade with Russia, Ukraine and Belarus is very limited (e.g. Russia is the 15th biggest trade partner of Germany, with a share of 2.3% of total goods trade in 2021), the consequences are strong due to disruptions in the supply chain (such as in the chemicals and automotive sectors, which together account for around 6.5% of GDP) and in energy imports. As a full stoppage of energy imports from Russia and Belarus is not expected, the main impact is caused by surging energy prices, with oil prices shooting up by 52% and natural gas prices by 55% between the beginning of 2022 and early April. Besides higher energy prices, further disruptions in the supply chain and higher food prices led to a record high increase of producer prices (the highest since 1949), which translated into a consumer price inflation rate of 7.3% in March 2022. This is the highest level since autumn 1981, in the aftermath of the second oil-price shock. While inflationary pressures should decrease slowly in the second half of the year, it should remain high, far above the 2% target of the ECB. Higher wage agreements with the unions should further push inflation, as well as the increase of the minimum wage from 9.82 euro per hour to 10.45 euro in July 2022 and to 12 Euro in October 2022. In total, nominal wages should increase by 2.5% this year and additional 4.4% in 2023, which could support higher inflation. The ECB is slowly reacting to this strong inflation dynamic. The central bank stopped the Pandemic Emergency Purchase Programme in March and could end all QE-purchases in Q3 2022. A first increase of the deposit rate is expected towards the end of the year, however, the central bankers will be probably cautious with rate hikes, as they want to calm down financial markets and keep yields of European bonds low. Due to the high inflation dynamics, the purchasing power of households will decrease noticeably, although, at least at the beginning of the year, the high savings that bulked up during the last two years of pandemic will buffer some of it. Nevertheless, consumption should decline in the first half of the year. Private investments should decrease too, due to the supply chain disruptions and sanctions, but also because of the high uncertainty regarding the development of the war. The public sector will support growth via higher military investments, energy subsidies to decrease the effect of surging energy costs (e.g. a subsidy for households to buy fuels for three months and a 300 Euro one-off payment for every household), and further support for companies still dealing with COVID-related measures. This comes in addition to the announced public structural investments of EUR 51.8 billion (1.4% of GDP) in 2022. While we expect only very limited growth over the rest of the year, it will be highly dependent on the further development of the COVID-19 pandemic and possible new mutations. 


A public deficit for the third consecutive year, albeit receding

Even including the new state support measures, expenditures should not increase much compared to the previous years, while tax receipts are expected to be higher in 2022. This will result in an improved public balance, but the deficit will remain for the third consecutive year. Thanks to low interest rates, the public debt ratio should remain stable. Germany’s current account surplus should fall. Due to new supply-chain disruptions, export growth should decelerate, while nominal imports could increase due to higher import prices. In addition, the services balance could slowly turn into a slight deficit again, after global travel restrictions progressively ease, while the balance of investment income (surplus) and the balance of current transfers (deficit) should see only cosmetic changes.


The first three-party-governing coalition in German history 

In September 2021, the social-democratic SPD won the parliamentary election with 25.7% of the votes just ahead of the Christian-democratic CDU/CSU with 24.1%. The environmentalist Greens came in third (14.8%), followed by the liberal FDP (11.5%), the right-national AfD (10.3%) and the Left (4.9%). SPD, Greens and FDP formed in December 2021 the very first three-party coalition on the federal level under the leadership of the new chancellor Olaf Scholz (SPD). The war in Ukraine forced a shift in some political areas, often in direct contrast to the ideology of the coalition parties. The Green party, which developed out of the peace movement in the 1980s, supported an investment package worth of EUR 100 billion for the military. Furthermore, the economic minister Habeck (Greens) visited countries in the Middle East (like Qatar) to order more gas for Germany. On the other side, the liberal Finance Minister Lindner (FDP) announced more support programs for the population to cope with higher energy prices via increasing public debt. Nevertheless, as all parties aim for a pragmatic political style, the coalition seems stable and should hold until the next election in September 2025.


Last updated: April 2022


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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