Germany: Staff Report for the 2006 Article IV Consultation
IMF Staff Country Reports, December 14, 2006
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- Germany: Staff Report for the 2006 Article IV Consultation
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Bibliographic details
- Published: December 14, 2006
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451810530.002
Summary
- The three-point VAT increase is part of a package in which unemployment payroll taxes will be reduced.
- Risks to the recovery are balanced but the range of forecasts for 2007 is unusually wide.
- The priority for Germany is to transmit its external strength to the domestic economy, thus further broadening the recovery and creating conditions for sustained high growth.
- The authorities are undertaking a review of active labor market policies (ALMPs) with a view to curtailing their number.
Fiscal measures and labor market
- Fiscal package: a three-point VAT increase combined with reductions in unemployment payroll taxes.
- Active labor market policies (ALMPs): authorities are reviewing ALMPs with the objective of curtailing their number.
Risks and growth outlook
- Risks to the recovery are described as balanced.
- The range of forecasts for 2007 is described as unusually wide, indicating uncertainty in near-term projections.
Policy priorities and recommendations
- Transmit external strength to the domestic economy to broaden the recovery.
- Create conditions for sustained high growth.
- Review and rationalize ALMPs to streamline active labor market interventions.