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Blog | 29. Juli 2016

BERLIN’S BOOMING DIGITAL SECTOR IS DRIVING ECONOMIC GROWTH

Berlin’s economy is in very good condition. After a strong growth of three percent last year, a further 2.7 percent was added in the first quarter of 2016 alone. The positive growth trend is expected to continue throughout the rest of the year. Economists at the Berliner Investitionsbank have forecast growth of 2.5 percent this year, which places Berlin well above the national average, which experts predict will be around 1.6 percent.

Berliners are also earning more. Gross wages have increased by a healthy four percent, swelling to an average of EUR 3,848. Yet another indicator of the city’s buoyant economic climate is its constantly declining unemployment rate. For the first time since the fall of the Berlin Wall, the jobless rate has dropped below ten percent. Just eleven years ago, the rate was almost twice as high. It’s no surprise that these developments have given companies, politicians, and Berliners confidence for the future.

Berlin’s prospering IT industry has been a major driver of the city’s growing economic power. In just the last three years, around 1,000 new companies have been founded; a new online-company is started in Berlin every 20 hours, creating additional employment opportunities. E-commerce is a particularly strong driver. Since 2008, the number of salaried positions in the digital economy has grown tenfold. About 69,000 people in Berlin currently work for so-called “start-ups”.

 

INTERNATIONAL HEAVYWEIGHTS BET ON THE “START-UP” HOTSPOT ON THE SPREE

International companies have long since recognized the vitality of this young, booming sector. One in three DAX companies has a development unit in Berlin. Following Google, Microsoft and Cisco, even IBM has become involved with a “start-up” hub – and picked Berlin as the second (after New York) of altogether 300 globally planned operations. The goal of IBM’s virtual meeting space is to create a central contact point for Berlin’s digital economy.

In cooperation with the Berlin Start-Up Unit, the U.S. American IT giant set up the “Tech Berlin” web portal last year. Similar to the U.S. model “Digital.nyc” from New York, young entrepreneurs and developers are able to meet up and exchange ideas, and also start networking with investors. This is important because Germany lags behind Silicon Valley in providing financial resources for start-ups.

 

VENTURE CAPITAL “MADE IN GERMANY”

This concept has changed noticeably. Berlin received more funding for start-ups than anywhere else in Europe in 2015. At EUR 2.1 billion, the fresh venture capital injected into Berlin’s new companies overtook even London’s EUR 1.7 billion, firmly establishing the city as the “European VC Champion”. Regional business promotion also supports the young start-up scene – particularly in terms of local and international cooperation. So far, this has led to a contract with three major Chinese companies, enabling a six-week exchange of entrepreneurs between both countries. Similar agreements have also been made with New York, as the technology industry’s leading market, and with Tel Aviv. Israel’s second-largest city, and only stock market centre, is also regarded as a “start-up” hub and is home to more than 1,500 young high-tech companies. Last year, Tel Aviv chose Berlin as its first partner city, recognising that Berlin has both sufficiently qualified workers with backgrounds in IT as well as plentiful venture capital.

Despite these growing international ties and ever-expanding global networks, Berlin’s economy still relies heavily on its medium-sized companies. About 90 percent of the city’s companies started as SMEs, and they are the powerhouse behind the German capital’s economic upswing, which has been going strong for five years now. Entrepreneurs continue to have an optimistic view of the future. According to a recent study (Creditreform/Investitionsbank Berlin), about two-thirds view the business environment as “very good” or “good”, basing their assessments on increasing revenues and high employment figures. This is the most positive result since the annual study was first carried out in 2011.

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Blog | 29. Juli 2016

BERLIN’S BOOMING DIGITAL SECTOR IS DRIVING ECONOMIC GROWTH

Berlin’s economy is in very good condition. After a strong growth of three percent last year, a further 2.7 percent was added in the first quarter of 2016 alone. The positive growth trend is expected to continue throughout the rest of the year. Economists at the Berliner Investitionsbank have forecast growth of 2.5 percent this year, which places Berlin well above the national average, which experts predict will be around 1.6 percent.

Berliners are also earning more. Gross wages have increased by a healthy four percent, swelling to an average of EUR 3,848. Yet another indicator of the city’s buoyant economic climate is its constantly declining unemployment rate. For the first time since the fall of the Berlin Wall, the jobless rate has dropped below ten percent. Just eleven years ago, the rate was almost twice as high. It’s no surprise that these developments have given companies, politicians, and Berliners confidence for the future.

Berlin’s prospering IT industry has been a major driver of the city’s growing economic power. In just the last three years, around 1,000 new companies have been founded; a new online-company is started in Berlin every 20 hours, creating additional employment opportunities. E-commerce is a particularly strong driver. Since 2008, the number of salaried positions in the digital economy has grown tenfold. About 69,000 people in Berlin currently work for so-called “start-ups”.

 

INTERNATIONAL HEAVYWEIGHTS BET ON THE “START-UP” HOTSPOT ON THE SPREE

International companies have long since recognized the vitality of this young, booming sector. One in three DAX companies has a development unit in Berlin. Following Google, Microsoft and Cisco, even IBM has become involved with a “start-up” hub – and picked Berlin as the second (after New York) of altogether 300 globally planned operations. The goal of IBM’s virtual meeting space is to create a central contact point for Berlin’s digital economy.

In cooperation with the Berlin Start-Up Unit, the U.S. American IT giant set up the “Tech Berlin” web portal last year. Similar to the U.S. model “Digital.nyc” from New York, young entrepreneurs and developers are able to meet up and exchange ideas, and also start networking with investors. This is important because Germany lags behind Silicon Valley in providing financial resources for start-ups.

 

VENTURE CAPITAL “MADE IN GERMANY”

This concept has changed noticeably. Berlin received more funding for start-ups than anywhere else in Europe in 2015. At EUR 2.1 billion, the fresh venture capital injected into Berlin’s new companies overtook even London’s EUR 1.7 billion, firmly establishing the city as the “European VC Champion”. Regional business promotion also supports the young start-up scene – particularly in terms of local and international cooperation. So far, this has led to a contract with three major Chinese companies, enabling a six-week exchange of entrepreneurs between both countries. Similar agreements have also been made with New York, as the technology industry’s leading market, and with Tel Aviv. Israel’s second-largest city, and only stock market centre, is also regarded as a “start-up” hub and is home to more than 1,500 young high-tech companies. Last year, Tel Aviv chose Berlin as its first partner city, recognising that Berlin has both sufficiently qualified workers with backgrounds in IT as well as plentiful venture capital.

Despite these growing international ties and ever-expanding global networks, Berlin’s economy still relies heavily on its medium-sized companies. About 90 percent of the city’s companies started as SMEs, and they are the powerhouse behind the German capital’s economic upswing, which has been going strong for five years now. Entrepreneurs continue to have an optimistic view of the future. According to a recent study (Creditreform/Investitionsbank Berlin), about two-thirds view the business environment as “very good” or “good”, basing their assessments on increasing revenues and high employment figures. This is the most positive result since the annual study was first carried out in 2011.

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