Economic Overview of Germany and What it means for International Students?

In the coming year 2025, the economy is expected to have stronger growth again, this may however be slow. A plus of 1.0% is predicted. Both a gradual increase in domestic demand due to rising real wages and a slow recovery in exports will have a positive impact. Investment growth is also expected to recover in 2025.

Germany boasts a massive economy, ranking third globally with a GDP of 4.121 billion euros in 2023. This powerhouse position extends to Europe, making it the continent's leader. Its robust export sector, particularly in vehicles and chemicals, further solidifies its position as the world's third-largest exporter. While manufacturing giants like cars drive exports, the service sector holds the biggest piece of the economic pie, contributing a whopping 70% to Germany's GDP.

EU Commission Adjusts Forecast

The European Commission recently revised its economic outlook for Germany downwards. Growth for 2024 is now anticipated to be a modest 0.1%, down from the previously projected 0.3%.

Brighter Days Ahead - Maybe: While the immediate future seems sluggish, a more positive outlook emerges for 2025. Growth is expected to pick up, albeit gradually, reaching around 1.0%. This optimism stems from factors like rising real wages boosting domestic demand and a slow but steady recovery in exports. Investment is also poised to rebound next year. Germany's unwavering demand for housing is expected to translate into a construction revival in the latter half of 2024, further supporting the economic situation.

A glimmer of hope emerges from the Ifo-Institute's May 2024 survey. Companies' business expectations climbed compared to the previous month, reaching a high of 90.4 points - the strongest since April 2023. While not reaching pre-war levels (February 2022 at 97.9 points), it indicates a positive shift in sentiment. Economic forecasts for Germany in 2024 remain uncertain, with organizations like research institutes and government bodies offering predictions ranging from a decline of -0.3% to a slight increase of +0.4%.

German exports increased in April 2024

German exports inched up 1.6% in April 2024 compared to March, reaching a total of €136.5 billion (after adjusting for seasonal effects). However, imports also rose slightly higher at 2.0%, reaching €114.5 billion.

There's a glimmer of optimism in the German export industry! The latest survey by the Ifo-Institute shows that export expectations improved in May 2024, rising to +0.3 points. This is a positive shift from the -1.5 points recorded in April 2024. While things are looking up, German exporters still face some headwinds. Fierce competition, increasing labour costs, and high energy prices remain hurdles to overcome, even with forecasts predicting a rise in global trade and industrial production this year.

After a temporary dip, inflation in Germany is back. May 2024 saw prices rise 2.4% on average compared to May 2023. While energy costs were slightly lower year-over-year, food prices climbed by 0.6% and the cost of services increased by 3.9%. Experts predict inflation will stay around its current level for the rest of 2024. Forecasts from different organizations range from a low of +2.2% to a high of +2.7% for the entire year.

Employment in Germany

The weak economy has consequences: despite the spring upturn, the number of unemployed fell only minimally by 27,000 to 2.723 million in May 2024. The usual decline for May was therefore comparatively small. The unemployment rate was 5.8%, 0.2 percentage points lower than in the previous month of April 2024. Compared to May 2023, however, the rate has increased by 0.3 percentage points.

Despite the weakening economy, skilled workers are still urgently needed. There is a shortage of skilled workers in almost one in seven occupations in Germany, as shown by the Federal Employment Agency's Skilled Workers Analysis 2023. According to the analysis, there are shortages in nursing and healthcare professions, skilled trades, professional road transport, childcare, social pedagogy and gastronomy, among others.

What does this mean for international students?

Every student planning to study abroad aspires to find employment in the country of choice. Be it for a temporary tenure of a couple of years to a more long-term immigration plan, post-study jobs are a big determinant. Also, while all aspire to work, the question most students ask is…Would I be able to get a job in the country after I complete my graduation? The economic overview helps in suggesting the possibilities of finding that job. Needless to say, the more robust the economy, the better the growth and better job prospects. The economic overview shows possibilities and opportunities in the popular job sectors in Germany.

Germany is a great destination for Indian students looking to pursue higher education. The country offers excellent quality education at a relatively affordable cost compared to other Western countries. Germany is also a leader in research and innovation, and its universities offer a wide range of programs in various fields. Germany attracts a large number of international students. The excellent education system in Germany coupled with low or no tuition fees makes German Universities a haven for quality education at an economical price. Especially for students from India, the country’s many state-run universities offer an excellent study-abroad destination. Know more about studying in Germany on our website. 

The future for Indian students looking to study in Germany looks bright. The German government is actively seeking to attract international students, and there are several programs and initiatives in place to make it easier for Indian students to study in Germany. Additionally, the German economy is strong, and there is a growing demand for skilled workers. This means that Indian students who graduate from German universities will have good job prospects after graduation.

source: The report and images have been sourced from KPMG 

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