- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Trade relations with the EU
The EU countries represent the most important trade grouping for Germany, with a long-term share of more than 50% of the trade exchange. As the world’s 3rd largest exporter, Germany has maintained a positive trade balance in relation to the EU for a long time. In 2021, there was a significant increase in mutual trade between Germany and EU countries (both on the export and import side). German exports to the EU increased year-on-year by 17.3%, imports from the EU by 16.0%.
- Allcountrylist: Overview of major industries in Germany, including mining, construction, transportation, tourism, and foreign trade.
|Exports from the EU (million EUR)||664,560.3||696 617.3||698,459.9||636,037.7||ON|
|Imports into the EU (million EUR)||640,702.40||681,781.10||695 173.40||647,041.30||ON|
|Balance with the EU (million EUR)||-23,858.0||-14,836.2||-3,286.6||11,003.5||ON|
Source: European Commission
Trade relations with the Czech Republic
Germany has long been the largest trade partner (in exports, imports, turnover) of the Czech Republic. Since 1998, the Czech Republic has maintained a positive trade balance in mutual trade, the amount of which will reach over EUR 22 billion in 2021. From 1993 to 2021, mutual trade turnover increased more than 13 times, in 2021 there was a year-on-year increase in Czech exports by 12.2%, while imports increased by 13.4% and mutual turnover by 10.2%.
|Exports from the Czech Republic (billion CZK)||981.5||1,426.4||1,457.7||1,449.1||ON|
|Imports to the Czech Republic (billion CZK)||1,384.0||1007.1||1012.4||916.7||ON|
|Balance with the Czech Republic (billion CZK)||402.4||-419.2||-445.3||-532.4||ON|
Trade relations with countries outside the EU
From countries outside the EU, China and the United States of America are among the most important trade partners of Germany in terms of total turnover, while the total turnover of these countries with Germany in 2021 represented 17.05% of the total turnover of Germany’s trade exchange. Exports from countries outside the EU decreased year-on-year in 2020 by -9.3%, and in 2021, on the contrary, increased by 0 9.4% year-on-year. Imports to countries outside the EU fell by -3.7% year-on-year in 2020. The declines in 2020 can be attributed to the coronavirus pandemic and the associated disruption of supply chains.
|Exports from countries outside the EU (million EUR)||565,984.7||624 115.10||631,954.10||573,170.00||632,545.70|
|Imports to countries outside the EU (million EUR)||350,815.8||414,867.7||358,416.9||345,564.1||ON|
|Balance with non-EU countries (million EUR)||215 168.9||217 150.1||212,088.2||183,833.3||ON|
Source: EIU, Eurostat
Foreign direct investment
Foreign direct investment in Germany fell to a record during the coronavirus pandemic. Nevertheless, approximately 17% of foreign direct investment in Europe went to Germany. At the same time, Germany itself is the second largest investor in Europe. In 2020, the Federal Republic of Germany mainly attracted investment projects focused on software and IT services (164), trade (138), engineering (99), electrotechnical industry (58), consumer goods (52) and automotive (45). Companies from the United States of America, China and Switzerland invested the most in the country.
Germany offers investors stable institutions, developed infrastructure, excellent law enforcement, qualified workforce and, last but not least, an excellent science and research background, which is the foundation of a number of top companies. As part of European investment screening legislation, purchases of shares in German companies are also screened in Germany (Außenwirtschaftsgesetz) in the case of entities from the EU, if it is a sensitive industry.
A number of Czech companies have a long-term presence in Germany, both through branches and investments in German companies. The most visible in Germany are the investments of large Czech companies such as EPH, which bought several lignite sites and power plants. A number of Czech companies operate logistics parks in Germany, such as VGP or Humpolec CTP. Czech companies also buy their German competitors, for example Wikov, Agrostroj Pelhřimov or Tedom. In recent years, Czechs have also left their mark in technology companies, for example Rockaway bought the internet retailer Bringmeister and Rohlík founded Knuspr. Given that the Federal Republic of Germany plans to invest in the development of modern infrastructure and digitization in the coming years, technology is an opportunity for foreign capital as well.
FTAs and treaties
Treaties with the EU
Germany is part of the EU. Given the importance of foreign trade for the German economy and its position as one of the world’s largest exporters, it is in Germany’s vital interest to have the most liberal trade policy possible, enabling access to new markets and the resulting support for the conclusion of EU free trade agreements with third countries.
Contracts with the Czech Republic
In addition to bilateral treaties and agreements, in 2003 the economic relations of the Czech Republic and the Federal Republic of Germany were regulated by a number of multilateral agreements, the most significant of which is the agreement on the accession of the Czech Republic to the European Union on 1 May 2004. The most important bilateral agreements of an economic nature include: Agreement between the Czechoslovak Republic and Federal Republic of Germany on the Promotion and Mutual Protection of Investments (No. 573/1992 Coll., signed on 2 October 1990 in Prague, valid from 2 August 1992) and the Agreement on the Avoidance of Double Taxation in the Field of Income and Property Taxes (No. 18/1984 Coll., signed on 19/12/1980 in Prague, valid from 17/11/1983).
Foreign development cooperation is the responsibility of the Federal Ministry for Economic Cooperation and Development. On the BMZ website, you can find the current list of projects of the Federal Republic of Germany with individual countries. The German Society for International Cooperation (GiZ) processes individual projects of the federal ministry.
Prospective fields of study (MOP)
Germany is among the most active supporters of renewable energy sources in the world. The new government comes up with the concept of massive investments in energy transformation, the amount of which is estimated at 1.25 trillion CZK per year in the coming years. For this reason, there is potential for Czech companies to supply parts for wind, solar, hydro and other unconventional power plants, including electrolyzers for the production of hydrogen. Other opportunities are provided by the ongoing massive construction of the transmission and distribution network, the construction of recharging infrastructure for electromobility and the decommissioning of nuclear power plants. Germany intends to become climate neutral by 2045 and by 2030 it wants to increase the share of renewable energies to 80% from today’s 42%. At the same time, in connection with the transition to electromobility, with the increase in the production of green hydrogen and with digitization, a sharp increase in electricity consumption is expected by up to 27% by 2030 (from today’s 560 TWh to 715 TWh). At the beginning of January 2022, the so-called Immediate Climate Protection Program (so-called Sofortschutzprogramm) was published, which provides an overview of planned climate protection measures. The goal is to triple the rate of emissions reduction and the construction of emission-free energy sources.
The coronavirus pandemic has highlighted the potential of digitization and the introduction of ICT in both public administration and the private sector. In Germany, there is a growing interest in technological solutions for the corporate sector (use of ICT and AI in industry, technology for e-commerce, digitization of services, tools enabling remote work), for state administration (e-government technology, digitization of healthcare) and digitization of schools. Germany plans to complete the construction of the 5G network by 2025 in an effort to provide the possibility of introducing next-generation technologies. In the coming years, the state plans to invest a total of up to trillion CZK in building optical networks. Thanks to the Act on tax support for research and development, not only public but also corporate investments in ICT and digitization will increase in the coming years. The federal government actively supports the development of information and communication technologies and digitization, across disciplines. Digitization and the introduction of ICT in Germany is currently very closely connected with ecology, sustainability and saving energy and other resources.
Healthcare and pharmaceutical industry
Germany strives for self-sufficiency in the area of so-called critical infrastructure. Therefore, state investments in the field of medical and pharmaceutical production can also be expected. At the same time, they are actively trying to strengthen the presence of pharmaceutical companies on their territory or in neighboring states, this represents a great opportunity for the Czech Republic as well. In 2020, spending on healthcare amounted to approximately CZK 10 trillion, which is 11.2% of GDP, and forecasts expect a year-on-year increase of up to percentage points. A big topic is the aging of the German population and the related plan to build new nursing homes, modernize hospitals or provide more social and spa services. The biggest challenge will be the digitization of patients’ medical records and the overall improvement of online access to patients (including health insurance companies) across Germany. Hand in hand with the planned digitization comes self-sufficiency and independence from the export of medical equipment and medicines from foreign countries, especially from China. Germany will strive to move some pharmaceutical companies to its territory, or on European soil. This could be an opportunity for Czech companies.
Rail and rail transport
The federal plan for transport routes until 2030 envisages investments of CZK 3 trillion in railways. In the coming years, we can therefore expect the reconstruction, expansion and maintenance of tracks, including the renewal of the rolling stock and the reconstruction of railway bridges. Germany is also a prospective market for Czech manufacturers of railway and track equipment, as the transport companies of German cities will issue tenders for the supply of rail equipment and the expansion of existing lines as part of climate protection. The new federal government has singled out the development of rail transport as one of its priorities, and by 2030 the railway is to double its share of passenger transport and increase the market share in freight transport to 25% by 2030 (from the current 19%). The federal road plan until 2030 envisages investments in 1,000 infrastructure projects in the amount of 7, 25 trillion CZK (railway projects: 3 trillion CZK, road projects: trillion CZK, water transport: 661 billion CZK). Investments in the maintenance and modernization of the existing railway network will be financed through the modernization program, which expects to invest trillion CZK by 2030.
Agricultural and food industry
New digital technologies such as advanced sensor technology, robotics and automation of data processing enable German farmers to use land more efficiently and thus produce food of better quality while respecting safety and sustainability parameters. This is also confirmed by the priorities of the new government – food self-sufficiency, increasing the quality and safety of food. 83% of German farmers use at least one of the digital technologies or applications that are established in the German agricultural market. At the same time, digitization can also play an important role in improving the quality of life in rural areas. The main priorities of the Federal Ministry of Agriculture for the coming years include strengthening food self-sufficiency, increasing quality (biological production is a big trend) and food safety, as well as a healthy pricing policy, especially when purchasing food from small and medium-sized farmers. Priorities include investments in agricultural technology that is more environmentally friendly and guarantees greater efficiency in the event of weather fluctuations due to climate change.
Further information on opportunities in Germany can be found in the Strategic Opportunities Map on the Export.cz website.