Changes

==Economy==

==Economy==

[[Image:The_castle3.jpg|right|thumb|270px|Neuschwanstein Castle, a popular tourist destination.]]

[[Image:The_castle3.jpg|right|thumb|270px|Neuschwanstein Castle, a popular tourist destination.]]

Germany is the world's fourth-largest economy and the largest in Europe.  

Germany is the world's fourth-largest economy and is currently the largest economy in Europe. From the 1948 currency reform until the early 1970s, West Germany experienced almost continuous economic expansion. Real gross domestic product (GDP) growth slowed down, and even declined, from the mid-1970s through the recession of the early 1980s. The economy then experienced 8 consecutive years of growth that ended with a downturn beginning in late 1992. Since unification, Germany has seen annual average real growth of only about 1.5% and stubbornly high unemployment. In 2006, Germany had its best year since 2000 with 2.7% growth; for 2007, growth was at 2.5% despite a 3 percentage point VAT hike at the beginning of the year. The government forecasts 1.7% growth in GDP for 2008. Unemployment in 2007 dropped to an annualized average of 9.0% nationwide, but it is still significantly higher—15.1%--in the German states that make up the former East Germany.  

From the 1948 currency reform until the early 1970s, West Germany experienced almost continuous economic expansion. Real gross domestic product (GDP) growth slowed down, and even declined, from the mid-1970s through the recession of the early 1980s. The economy then experienced 8 consecutive years of growth that ended with a downturn beginning in late 1992. Since unification, Germany has seen annual average real growth of only about 1.5% and stubbornly high unemployment. In 2006, Germany had its best year since 2000 with 2.7% growth; for 2007, growth was at 2.5% despite a 3 percentage point VAT hike at the beginning of the year. The government forecasts 1.7% growth in GDP for 2008. Unemployment in 2007 dropped to an annualized average of 9.0% nationwide, but it is still significantly higher—15.1%--in the German states that make up the former East Germany.  

Germans often describe their economic system as a "social market economy." The German Government provides an extensive array of social services. The state intervenes in the economy by providing subsidies to selected sectors and by owning some segments of the economy, while promoting competition and free enterprise. The government has restructured the railroad system on a corporate basis, privatized the national airline, and is privatizing telecommunications and postal services.  

Germans often describe their economic system as a "social market economy." The German Government provides an extensive array of social services. The state intervenes in the economy by providing subsidies to selected sectors and by owning some segments of the economy, while promoting competition and free enterprise. The government has restructured the railroad system on a corporate basis, privatized the national airline, and is privatizing telecommunications and postal services.  

Germany has a liberal foreign investment policy. For 2005, the most recent year for which statistics are available, German investment in the U.S. amounted to 233 billion euros (29% of all German foreign direct investment, or FDI; the U.S. is the number-one destination for German FDI), while U.S. investment in Germany was 45 billion euros (11.5% of all FDI invested in Germany; U.S. is third-largest source of FDI in Germany).  

Germany has a liberal foreign investment policy. For 2005, the most recent year for which statistics are available, German investment in the U.S. amounted to 233 billion euros (29% of all German foreign direct investment, or FDI; the U.S. is the number-one destination for German FDI), while U.S. investment in Germany was 45 billion euros (11.5% of all FDI invested in Germany; U.S. is third-largest source of FDI in Germany).  

U.S. firms employ about 510,000 people in Germany; German firms likewise employ about 746,000 people in the United States.  

U.S. firms employ about 510,000 people in Germany; whereas German firms likewise employ about 746,000 people in the United States.  

Despite persistence of some structural rigidities in the labor market and extensive government regulation, the economy remains strong and internationally competitive. Although production costs are very high, Germany is still an export powerhouse, and unit labor costs have decreased in the last 10 years. Additionally, Germany is strategically placed to take advantage of the rapidly growing central European countries. The current government has addressed some of the country's structural problems, with important tax, social security, and financial sector reforms.  

Despite persistence of some structural rigidities in the labor market and extensive government regulation, the economy remains strong and internationally competitive. Although production costs are very high, Germany is still an export powerhouse, and unit labor costs have decreased in the last 10 years. Additionally, Germany is strategically placed to take advantage of the rapidly growing central European countries. The current government has addressed some of the country's structural problems, with important tax, social security, and financial sector reforms.