Germany: a crucial partner for Spain that continues to offer opportunities for our companies

Germany’s economy, the main engine of the European economy (23% of the EU’s GDP), recorded 2.7% growth in 2021. However, this is insufficient to return to pre-pandemic levels. Its unemployment rate, according to recent data published by Eurostat, is only 3.0%. Germany’s main strengths lie in its high level of industrial productivity, competitiveness and the fact it is strongly geared towards exports.

Germany has a potential market of more than 83 million high-income consumers. There is a very significant disparity in GDP per capita between Germany and Spain: 40,090 euros versus 23,690 euros, respectively.

Although the federal capital is Berlin, the seat of the main political decision-making institutions, Germany’s administrative structure is highly decentralised, with public bodies highly dispersed around the country. In economic terms, it also shows highly-dispersed productive centres. In terms of its foreign sector, Germany is the world’s third-largest exporter, trailing only the United States and China, and accounting for 8% of global trade.

Bilateral economic relations

Bilateral trade relations between Spain and Germany are intense. Germany is currently Spain’s second largest customer, behind only France, while Spain is Germany’s twelfth-largest trading customer. The number of Spanish exporting companies exporting to Germany exceeds 14,200 companies.

After France, Germany was Spain’s second largest trading partner in 2021. More than 1,800 German companies currently trade in Spain, contributing around 200,000 direct jobs and almost half a million indirect jobs. As for tourism, Germany is one of the main countries of origin of visitors to Spain. In 2019, before the pandemic, Spain received 11.3 million German tourists.

Regarding the composition of trade, most of the imports we receive from Germany consist mainly of industrial goods, which range from chemical and semi-manufactured products to capital assets, automotive vehicles and their components and industrial machinery. As regards the main sectors of Spanish exports to the German market, automobiles, fruit and vegetables, chemicals and transport equipment stand out.

According to figures from the Directorate General for Trade, Spanish exports in 2020 were worth 29.567 billion euros, and imports from Germany totalled 34.148 billion euros, with the trade balance clearly favouring Germany. The figures for 2021 show a notable boost to bilateral trade, with Spanish sales to the German market rising by 8.8%. German imports into Spain increased by 13.4%.

In terms of investment, Germany is the fifth-largest foreign investor in Spain and the seventh-largest recipient of Spanish investment. In 2019, gross investment flows into Spain were worth 657 million euros, while investment in the opposite direction was worth 298 million euros. According to official German sources, Spain is the ninth-largest destination for German foreign investments and the tenth-largest investor country.

Business opportunities

There is demand for high-quality foreign suppliers among German companies in the industrial sector that may offer a good opportunity for Spanish companies. German industry is facing difficulties in some sub-sectors due to a shortage of skilled personnel, and this may offer employment opportunities for young professionals.

The German government is promoting various investments in sectors such as retrofitting buildings, digital infrastructure, telecommunications, rail transport, airport management, vehicle electrification, hydrogen energy and wind energy projects. The energy crisis is an opportunity to develop energy production that will offer an alternative fossil fuels and to decarbonise, something that Spanish companies specialising in renewables can take advantage of. In the public infrastructure construction and management sector, there are also opportunities for companies with experience in this field.

One of the sectors with the greatest potential is that of services related to care of the elderly due to the ageing demographics. In services, there are also opportunities in e-commerce, due to the change in consumption habits and the reordering of the sector in Germany. The expansion of this sales channel is also leading to rising demand for logistics services that can be exploited by foreign companies.

The digitalisation the German Government is promoting opens a window of opportunity for Spanish companies in the ICT sector, especially in the field of cybersecurity, data protection and development of digital solutions applied to industrial processes.

On the other hand, Germany is a country with one of the highest numbers of trade fairs in the world, with events about highly diverse sectors, largely industrial, which offer good opportunities for Spanish companies to make themselves known in the German market or to expand their presence in it.

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