Germany is one of the leading powers of the European continent. Officially known as the Federal Republic of Germany, the country consists of 16 states and is spread over an area of 357, 578 square kilometers. The second most populous country in Europe with around 83 million inhabitants, Germany has worldwide recognition as an economically and socially advanced nation. The country is also considered a technological leader, having produced some of the world’s most famous scientists.
In this PESTLE analysis of Germany, we are going to take a broad look at the 6 macro-environment factors that affect Germany and its people. Through this we aim to gain an understanding of the various opportunities and well as pitfalls that the country may have to contend with in light of global politics and economy.
Table of Contents
Political Factors
As the official name of the country suggests, Germany is a Federal, Parliamentary Democratic Republic, with the Chancellor as head of the government. Considered the most powerful player in the European Union, Germany has been a long-time ally of its neighbor France which has been crucial in cementing Germany’s position as a leading power in the continent.
Germany has recently been rankled by political turmoil. Imminent changes in leadership, together with the looming shadow of Brexit have caused a fair amount of upheaval in the political landscape of the country. However, seeing as the country has a history of opting for stable governments, Germany can hope to be leading Europe in the new era yet again.
Economic Factors
Germany is the 4th largest economy in the world. With nominal GDP forecasts for 2019 set to the tune of $4.2 trillion, the country looks set for robust economic growth. However, a GDP decline in late 2018, coupled with shaky industrial growth, has left a shadow on the economic horizon of the nation.
Germany boasts of a low unemployment rate of 3.2%, which is arguably one of the lowest worldwide. One of the top exporters of the world, Germany has a mixed economy with a budgetary surplus. And although the recent refugee crisis has left the country shaken, but with a strong economic foundation, Germany looks set to remain an established economic power.
Social Factors
Due to its high economic standards and educational and technological advancements, Germany is considered one of the best places to live on the planet. The life expectancy for German women is around 83 years while for men it is 78 years. The country has a modest birth rate, leading to a shrinking and largely elderly population.
A cosmopolitan country with diverse lifestyles, the majority of the population here is identified as Christian, though Islam and other religions are also practiced. Almost 19 million people in the country come from migratory backgrounds. Germany identifies itself as a welfare state and considers citizen welfare its primary objective.
The German society is known for its punctuality, strong ethics and hard work. The country also excels in the world of sports, especially football.
Technological Factors
Germany is well known for its advancements in the field of science and technology. One of the leading car manufacturers in the world, the nation is home to global automobile brands such as Mercedes, Volkswagen and BMW. Globally, Germany is considered the 5th most technologically advanced nation, with expertise across multiple sectors such as engineering, medicine and infrastructure, just to name a few. The country is also a leading nation in terms of information technology and has already made significant advances in the fields of AI and machine learning.
Legal Factors
The legal landscape of Germany promotes the establishment of business ventures by both citizens as well as foreign investors. An excellent investment environment, together with top-notch infrastructure and structural reforms to the corporate tax rates has made the country an attractive destination for investors worldwide.
Environmental Factors
Germany, along with the rest of the world, faces the threats of global warming and climate change. Environmental pollution, together with rapid industrialization and use of fossil fuels has prompted the nation to adopt a policy of encouraging alternative energy sources. The country is home to the world’s largest wind farms and wind turbine, as well as the largest solar park, Solarkomplex Senftenberg. Germany is working its way towards sustainable resource utilization and plays an important role in international climate cooperation.
Conclusion
Notwithstanding recent political instability, Germany still commands a position of advantage in the world. Technological prowess, a strong economy and excellent investment prospects help the country to remain a force to reckon with.
Image by RalfWieckhorst
