Germany

2016 business cost index

92.3

Country ranking

8th / 10

Germany, GDP per capita: US$47,822 (2014), GDP growth rate: 1.3% (2015), Unemployment rate: 4.5% (Q4/2015), Inflation rate: 0.2% (2015)
Locations12016 indexRank12014 indexRank1
Germany92.38100.910
Berlin91.933100.898
Frankfurt92.836101.099
1  Overall results for the country and cities. Rank for Germany is relative to 10 countries in both 2016 and 2014. Ranks for cities are relative to 111 cities in 2016 and 107 cities in 2014.
 
Sectors2016 indexRank22014 indexRank2
Digital services89.09102.010
R&D services84.07100.410
Corporate services83.97100.510
Manufacturing95.08100.910
2  Rank is relative to 10 countries in both 2016 and 2014.
 
Cost factors3
  • 19.8% currency depreciation against the US$
  • Below-average increase in total labor costs
  • Decreases in all categories of facility-related costs
  • Decrease in natural gas costs
  • Decrease in property taxes due to lower property values
3  Significant cost trends between 2014 and 2016.
 
Exchange rate sensitivity4IndexChangeRank5
20% appreciationUS$1 = €0.7399.6-7.38
20% depreciationUS$1 = €1.0987.5+4.88
4  "What if" sensitivity scenarios based on appreciation or depreciation relative to the US dollar.
5  Rank among 10 countries assuming equal appreciation/depreciation of all currencies relative to the US dollar.

Locations

National results for Germany reflect the combined results for two major cities: Berlin and Frankfurt. Total business costs in Berlin are 0.9 percentage points lower than in Frankfurt. Since 2014, particularly low growth in labor costs in Berlin have helped it to increase its cost advantage relative to Frankfurt. Also over the last two years, relatively lower business costs have allowed both Berlin and Frankfurt to move ahead of London in the cost rankings among the major European cities.
 

Sectors

Among the four study sectors, Germany ranks seventh among the 10 countries for both R&D services and corporate services, with similar cost advantages relative to the US baseline in both of these sectors. Germany drops to eighth place for the manufacturing sector and to ninth place for digital services. These differences in sector rankings for Germany cannot be attributed to any one factor, but rather are the result of small changes in its relative advantages and disadvantages among all of the cost factors examined.
 

Cost factors

The rise in value of the US dollar relative to the euro in 2015 is the primary driver of Germany’s improved cost index in 2016 and the significant improvement in rankings for the two German cities. However, other cost trends as noted in the table help Germany to move ahead of Japan in the current study.
 

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