## Germany’s Economic Outlook in Six Charts

_IMF News, July 5, 2018_

## Source details

**Canonical URL:** [Germany’s Economic Outlook in Six Charts](https://www.imf.org/en/news/articles/2018/07/03/na070318-germanys-economic-outlook-in-six-charts)

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## Bibliographic details
- Published: July 5, 2018

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### Economic momentum and external balance
- Growth rose to 2.5 percent in 2017.
- Momentum expected to persist in 2018.
- Business investment expected to be dynamic.
- Strong job growth and unemployment falling to new post-reunification lows; rising wages should boost private consumption.
- Higher wage growth and stronger imports would help bring down Germany’s large current account surplus, which stood at 8¼ percent of GDP in 2017.

### Public finances and fiscal outlook
- The budget surplus rose to 1.2 percent in 2017 — the highest level since reunification.
- Fiscal surpluses are projected to remain high over the medium term, pushing debt down to 42 percent of GDP by 2023.
- The strong fiscal position can be used to increase investment in physical, digital, and human capital.

### Investment priorities and human capital
- Public investment in infrastructure, especially at the municipal levels, can help crowd in private investment and support external rebalancing.
- New government plans to increase investment in digital infrastructure, especially high-speed nationwide internet connections, are essential to keep Germany’s edge as an innovation leader.
- With the high probability of an average German job of being lost to automation, investment in life-long learning is key to boosting productivity and long-run growth.

### Labor force participation and demographic challenges
- Germany’s workforce will begin shrinking in 2020.
- Policies to tap into the potential of women, older workers, and migrants can help offset this decline.
- Expanding childcare and after-school programs would provide greater opportunities for women to pursue full-time employment.
- Pension and labor market reforms that make it more attractive to stay in the workforce longer can reduce the need to save and lift growth.

### Entrepreneurship and venture capital
- Fostering entrepreneurship can raise productivity growth and investment.
- Germany is an innovation leader, but with a relative weakness in venture capital.
- The government should encourage the provision of scale-up capital to support startups at the growth stage.
- New business creation and expansion are essential for technological diffusion and productivity growth.

### Housing market and financial stability
- Rising wages, large immigration flows, and low interest rates are driving up the demand for housing.
- House prices in major cities such as Munich, Hamburg and Frankfurt have risen much faster than in other European Union cities.
- Policy options: lower the burden on new construction to ease supply constraints; strengthen the prudential toolkit to help preserve financial stability.

*IMF News — Germany’s Economic Outlook in Six Charts, July 5, 2018*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [latest annual assessment](http://www.imf.org/en/Publications/CR/Issues/2018/07/04/Germany-2018-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-46049)
- [Read the press release](http://www.imf.org/en/News/Articles/2018/07/04/pr18276-imf-executive-board-concludes-2018-article-iv-consultation-with-germany)
- [Germany and the IMF](http://www.imf.org/en/Countries/DEU)
- [Watch the video](http://www.imf.org/external/mmedia/view.aspx?vid=5805688690001)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/07/03/na070318-germanys-economic-outlook-in-six-charts_