Economic Scenario of Germany

Germany is the largest economy of Europe and fifth largest of the world in the world in terms of Purchasing Power parity (PPP). Highly skilled labour force, continuous advancement in technology and well thought out development planning has made it one of the leading developed economies of the world. Real GDP growth however slowed down to 0.5% in 2019 and then contracted by 4.9% in 2020 due to the Pandemic effect but domestic consumption, investment, and exports have driven German GDP growth to 2.7% in 2021 but then dropped by 1.8% due to slowdown in Europe as a whole. However, uncertainty is high amidst strong energy price volatility of late. High inflation is reducing real incomes and savings thereby dampening private consumption. Export growth may recover through 2023 due to easing of supply chain bottlenecks and a record-high order backlog. The economy is projected to contract by 0.5% in 2023 and recover by 0.9% in 2024 as per IMF.

Bilateral Trade between India and Germany

Germany is the third largest destination for India’s engineering exports and the largest in European Union. Engineering exports to Germany reached its all-time high at USD 3.86 billion in 2021-22 and then again to USD 3.94% in 2022-23 registering a substantial 48% growth in 2021-22 and 2.1% growth in 2022-23 over the previous fiscals. During the ongoing fiscal 2023-24, engineering exports to Germany continued to be optimistic with USD 2.43 billion of exports during Apr-Oct 2023-24 as against USD 2.22 billion during the same period last fiscal, registering 9.6% growth. It is quite impressive as well as encouraging that when engineering exports to EU has declined in 2022-23 and 2023-24, engineering exports to Germany has been rising continuously. India’s major engineering exports to Germany include Electric Machinery and Equipment, Iron and steel and its articles, Auto Components/Parts and Industrial Machinery among others.

Opportunity for Indian Engineering in Germany

Germany is an important partner for economic tie can contribute in the process of Indian economic development. Germany also sees India as a regional and an aspiring global power, and a large market which provides an alternative to China. Germany is India’s largest trading partner in Europe in overall merchandise trade and 7th largest source of FDI among all nations of the world. Germany is one of the nations to adopt industry 4.0 with a solid and high-end manufacturing base. As Germany is one of the largest consumers for Indian engineering products and demand for Indian engineering has been on the rise in Germany despite of a slowdown in demand from EU region, it seems that Hannover at this juncture is a right platform for Indian engineering exporters to tap the vast market of Germany further.