lly powerful economy - the fifth
largest in the world - has become one of the slowest growing
economies in the euro zone. A quick turnaround is not in the offing
in the foreseeable future. Growth in 2001-03 fell short of 1%,
rising to 1.7% in 2004. The modernization and integration of the
eastern German economy continues to be a costly long-term process,
with annual transfers from west to east amounting to roughly $70
billion. Germany's aging population, combined with high
unemployment, has pushed social security outlays to a level
exceeding contributions from workers. Structural rigidities in the
labor market - including strict regulations on laying off workers
and the setting of wages on a national basis - have made
unemployment a chronic problem. Corporate restructuring and growing
capital markets are setting the foundations that could allow Germany
to meet the long-term challenges of European economic integration
and globalization, particularly if labor market rigidities are
further addressed. In the short run, however, the fall in government
revenues and the rise in expenditures have raised the deficit above
the EU's 3% debt limit.

GDP (purchasing power parity):
$2.362 trillion (2004 est.)

GDP - real growth rate:
1.7% (2004 est.)

GDP - per capita:
purchasing power parity - $28,700 (2004 est.)

GDP - composition by sector:
agriculture: 1%
industry: 31%
services: 68% (2002 est.)

Labor force:
42.63 million (2004 est.)

Labor force - by occupation:
agriculture 2.8%, industry 33.4%, services 63.8% (1999)

Unemployment rate:
10.6% (2004 est.)

Population below poverty line:
NA

Household income or consumption by percentage share:
lowest 10%: 3.6%
highest 10%: 25.1% (1997)

Distribution of family income - Gini index:
30 (1994)

Inflation rate (consumer prices):
1.6% (2004 est.)

Investment (gross fixed):
17.6% of GDP (2004)

Budget:
revenues: $1.2 trillion
expenditures: $1.3 trillion, including capital expenditures of NA
(2004 est.)

Public debt:
65.8% of GDP (2004 est.)

Agriculture - products:
potatoes, wheat, barley, sugar beets, fruit, cabbages; cattle,
pigs, poultry

Industries:
among the world's largest and most technologically advanced
producers of iron, steel, coal, cement, chemicals, machinery,
vehicles, machine tools, electronics, food and beverages;
shipbuilding; textiles

Industrial