ifo Institute Expects German Supply Chains to Diversify More

However, the essay continues, Germany is generally well prepared for the possibility of delivery failures. It imports almost 89 percent of all its goods from 11 or more countries, while importing only 3.6 percent of all goods from five or fewer countries. Of these imports, 44 percent originate in countries within the EU. Among the products imported from five or fewer countries, the US and Switzerland are mentioned more often than China or Mexico.  Goods imported exclusively from one country accounted for less than 1 percent of all products and less than 0.1 percent of total imports by value.

However, the authors continue, free movement of goods within Europe is a must for restarting the economy after the coronavirus pandemic. This is because 17 percent of production in Germany takes place as part of international value chains. This is a significantly higher proportion than in many other countries. For Germany, the European production network is of paramount importance; German value chains are primarily regional in character.

Germany and the EU are more tightly integrated into international supply chains than China and the US, and also more so than the average of all countries worldwide. In 2015, for example, only about 69 percent of German and 71.8 percent of EU value added did not cross a border. This is little by international comparison. The global average was 80 percent; in China, the figure was around 83 percent, while in the US it was almost 90 percent.