Germany’s Role as a Trader in Services: Difficult Factfinding and Uncertain Prospects

The author sheds a light on the overall importance of Germany’s recorded service trade, in particular by pointing to the differences of various regions in goods and service trade for Germany. He reveals that German service trade comprises about a fifth of its total trade with no substantial change since 2009. Despite these supposedly low dynamics, Germany is among the world’s leading traders of services whereby unreported trade is large. Travel accounts for a quarter of total German service imports thus driving the German trade deficit in services for a large part. It is furthermore analyzed that the EU goods market is of much higher importance than the EU service market for exports as well as for imports. The author also shows that there are strong trade links between Germany and the US in services, in particular when buying services from the US with a focus on services in the financial services and in the IT sector. In contrast, Asia has not yet emerged as a similarly important export and sourcing market for services as for goods. The author proposes to strengthen German competitiveness in services trade by completing the EU single market for services and providing incentives for foreign investors.