Indeed, despite persisting political risks the global economy has picked up speed, again adding breadth to economic growth in Germany. While renewed momentum in the world economy is stimulating German exports, a simultaneous and even stronger increase in imports is neutralising the net economic effect. Germany’s economy is being driven not only by this strong growth in consumption, but also by capital formation, with investment in machines and equipment in particular rising at a slightly faster pace. Employment is setting new records in quick succession. In 2018, an average of almost 45 million people will be gainfully employed in Germany. Unemployment will drop below 2.5 million, to a rate of 5 ½ per cent. After a 2 ¼ per cent increase in 2017 real GDP will grow by around 2 per cent in 2018, losing a certain amount of dynamism as expansion slows in the construction industry. A slight weakening is also to be expected in consumption and exports. The robustness of the German economy is fuelling speculation that it is in danger of overheating. One third of the companies consulted by the Cologne Institute for Economic Research (IW) in its business survey report that demand currently exceeds capacity, while only just under 12 per cent report slack. Production is being limited by a lack of skilled workers, with two-thirds of the companies working at over-capacity citing a shortage of qualified employees as one of the causes. However, the lack of skilled workers not only explains limited production capacity and operational overload: it also represents a barrier to investment in Germany.
What Lies Behind the Declining Number of New Stock Exchange Listings?
The Costs and Benefits of Continuing Further Training
Has the German Economy Reached its Limit? Skilled Labour Shortages as a Brake on Growth
The German economy is performing significantly better than was expected in the first few months of this year. During the course of 2017, certain early fears – especially of a weakening of the global economy due to increasing protectionism – have proved groundless.
- IW Research Group Macroeconomic Analysis and Forecast ·
- IW-Trends ·
- 27 Nov 2017