Introduction:
As Europe's largest economy and second most populous nation, Germany is a key member of the continent's economic, political, and defense organizations. European power struggles immersed Germany in two devastating World Wars in the first half of the 20th century and left the country occupied by the victorious Allied powers of the US, UK, France, and the Soviet Union in 1945. With the advent of the Cold War, two German states were formed in 1949: the western Federal Republic of Germany (FRG) and the eastern German Democratic Republic (GDR). The democratic FRG embedded itself in key Western economic and security organizations, the EC, which became the EU, and NATO, while the Communist GDR was on the front line of the Soviet-led Warsaw Pact. The decline of the USSR and the end of the Cold War allowed for German unification in 1990. Since then, Germany has expended considerable funds to bring Eastern productivity and wages up to Western standards. In January 1999, Germany and 10 other EU countries introduced a common European exchange currency, the euro.

Location: Central Europe, bordering the Baltic Sea and the North Sea, between the Netherlands and Poland, south of Denmark

Population: 82,422,299 (July 2006 est.)

Languages: German

Country name: conventional long form: Federal Republic of Germany
conventional short form: Germany
local long form: Bundesrepublik Deutschland
local short form: Deutschland
former: German Empire, German Republic, German Reich

Capital: name: Berlin
geographic coordinates: 52 31 N, 13 24 E
time difference: UTC+1 (6 hours ahead of Washington, DC during Standard Time)
daylight saving time: +1hr, begins

Economy - overview:
Germany's affluent and technologically powerful economy - the fifth largest in the world - has become one of the slowest growing economies in the euro zone. A quick turnaround is not in the offing in the foreseeable future; however, stronger growth this year has improved employment considerably. Growth in 2001-03 fell short of 1%, rising to 1.7% in 2004, falling back to 0.9% in 2005, and increasing to 2.2% in 2006. Unemployment fell to 7.1% in October 2006, based on the Internation Labor Organization's measurement. The modernization and integration of the eastern German economy continues to be a costly long-term process, with annual transfers from west to east amounting to roughly $70 billion. Germany's aging population, combined with high chronic unemployment, has pushed social security outlays to a level exceeding contributions from workers. Structural rigidities in the labor market - including strict regulations on laying off workers and the setting of wages on a national basis - and a lack of competition in the sevice sectors have made slow growth a chronic problem. Corporate restructuring and growing capital markets are setting the foundations that could help Germany meet the long-term challenges of European economic integration and globalization; however, the current government has failed to pass meaningful economic reform that would improve growth prospects. Higher government revenues from the cyclical upturn in 2006 reduced Germany's budget deficit to within the EU's 3% debt limit.