READ full country note (PDF)
Economic growth is projected to remain solid, backed by robust world trade, investment and a booming labour market. Consumption growth has slowed somewhat, as higher inflation has curbed real wage growth. Low interest rates, high capacity utilisation and growing housing demand are supporting strong residential and business investment. The current account surplus is projected to fall somewhat on the back of strong domestic demand that fuels imports.
Fiscal policy is mildly expansionary, but strong cyclical revenue growth will keep the budget balance in surplus. Reductions in social security contributions and higher subsidies for families are expected, although their timing remains uncertain. Fiscal space is available to increase spending on education, broadband and low-emission transport infrastructure, all of which would strengthen productivity in the long run. Tax reductions for low-wage and second earners along with higher environmental and real estate taxes would promote greener and more inclusive growth.
Economic Survey of Germany (survey page)