Country Overview: Germany's $2 trillion economy emerged from a long period of stagnation last year to post a 2.2% growth rate, cutting unemployment to about 7%. The last two decades have been dominated by the modernization and integration of the economy of the former East Germany, a costly, long-term process.
Unemployment and an aging population have pushed social welfare outlays to a level exceeding contributions.
The current government of Chancellor Angela Merkel has initiated reforms that include the gradual raising of the mandatory retirement age from 65 to 67 and measures to increase female participation in the labor market. Germany hopes that corporate restructuring and improving capital markets will help it meet the long-term challenges of integrating Europe.