After the end of World War II, Germany took various steps in order to reconstruct its economy and has certainly achieved significant economic success. This magical economic recovery has put Germany into the third spot after US and Japan in among the world's largest economies. The careful choice of fiscal and monetary policies adopted by the German government has played a crucial role in turning around the economy. Utilizing Marshall Plan aid to the optimum, building friendly relations with the social partners and adopting plans for rebuilding played a major role in reviving the economy after the damage suffered by it in World War II. Germany adopted an economic policy with main focus on creating social market economy. This idea involved letting the market forces govern the growth of the economy, while the government, mainly focuses on improving the status of poor and neglected, and checking the flaws in the market.

Germany had a thriving economy, which though, suffered huge set backs when the East and West Germany were united in the year 1990. The decline in economy was mainly because of the differences between the economic structures of two parts of Germany.

This together with ageing population and rising unemployment contributed in further deterioration of the economy. The labor market suffering from slow economic growth and unclear incentives is the main hindrance in both hiring and taking work. However, the business reforms and increasing capital markets are providing the much need impetuous that will help Germany to attain its long-terms goals and meet the challenges of European and Global economies.

Public sector reforms and fiscal consolidation and interconnecting them, and to further enhance the capacity of the economy in order to create more employment opportunities and to boost the productivity growth are the major challenges that Germany faces today. Innovative economic steps are also needed for creating new business enterprises and widening the competition in product markets. Reducing administrative costs and removing entry barriers should boost more competitive product markets.

Germany still remains one of the leading exporters of the world. However, its export declined in beginning months of 2009, German exports to USA declined by 27.4% or $4.1 billion in comparison to the same period in 2008. This may be attributed to the allover weakness witnessed by major economies throughout the world lately.

The GDP or Gross Domestic Product is greatly related to the international trade. Germany's GDP in 2009 was $2.8 trillion. 95% of Germany's GDP comes from its export and import. $1.5 trillion is the figure for Germany's worldwide exports and $1.2 trillion is the amount of its imports. In comparison, exports and imports constitutes about 23% of USA's GDP.

United States imported about 7.5% of the total German exports, making it the second largest consumer of the German goods. France, Britain, Italy, Holland, Austria, Belgium and Spain are the other major consumers of German goods.

$1.2 trillion worth of goods was imported by Germany in the year 2008. Major part of imports was from European Union with China and USA being the other leading countries.