Joint Diagnosis Germany Autumn 2016: German Economy Well Utilised – Realign Economic Policy

The German economy is experiencing a moderate upswing. Gross domestic product is expected to grow by 1.9 percent in 2016 and 1.4 percent in 2017. The expansion rate is expected to reach 1.6 percent in 2018. Overall economic capacities are thus being used to a somewhat greater extent in the forecast period than the long-term average. Nevertheless, it is not so much corporate investments that are currently bearing the brunt of the upturn: the global economy is having only a minor stimulating effect, with the result that exports are rising only weakly; furthermore, the extraordinarily low capital market interest rates reflect not only the current course of monetary policy, but also low growth expectations. All this is hampering investment in equipment. Consumption continues to be the primary driver of the upturn. Private consumption is benefitting in particular from the sustained rise in employment, while public consumption is rising, due in part to the continued high expenditure on housing and the integration of asylum seekers. Housing construction is stimulated by low interest rates.