Germany: Staff Report for the 2014 Article IV Consultation
IMF Staff Country Reports, July 21, 2014
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- Germany: Staff Report for the 2014 Article IV Consultation
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Bibliographic details
- Published: July 21, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498307055.002
Key issues — context and risks
- Fundamentals are sound: balance sheets are generally healthy, unemployment is at a historic low, and the fiscal position is strong.
- Recovery is underway, but medium-term growth prospects are subdued.
- The current account surplus remains high.
- The economy faces:
- a still weak international environment;
- lingering uncertainty, including about future energy costs;
- fast approaching adverse demographic changes.
Main findings and implications
- Germany could do more to increase its growth, thereby strengthening its role as an engine of euro area recovery.
- Public investment (particularly in transport infrastructure) can durably raise German output and generate measurable growth spillovers to the rest of the euro area, unlike public consumption.
- Services sector regulation remains a constraint; further reforms would boost competition and productivity.
- Uncertainty about the future energy sector regulatory framework is weighing on private investment; greater clarity would encourage investment in energy infrastructure and beyond.
- Decisions on the future level of the minimum wage should take into account employment effects in certain regions.
- Banks should continue strengthening their capital position ahead of the completion of the ECB’s Comprehensive Assessment.
- The macroprudential framework needs to be ready as monetary conditions are set to remain accommodative for a prolonged period.
Policy recommendations (prioritized)
- Finance an increase in needed public investment, particularly in transport infrastructure, using available fiscal space.
- Implement further reforms in services sector regulation to boost competition and productivity.
- Provide greater clarity on the future energy sector regulatory framework to encourage private investment.
- Consider regional employment effects when setting the future level of the minimum wage.
- Ensure banks strengthen capital positions before the ECB’s Comprehensive Assessment.
- Prepare and operationalize the macroprudential framework given prolonged accommodative monetary conditions.
Metadata (from the content)
- Publication date: July 21, 2014.
International Monetary Fund. "Germany: Staff Report for the 2014 Article IV Consultation."