Economic growth is projected to strengthen, supported by domestic demand. Real wage gains and low unemployment should sustain consumption growth while improving confidence in the euro area recovery and low interest rates are expected to boost investment spending. Exports will accelerate gradually as the recovery takes hold in the euro area and emerging market economies strengthen again. The current account surplus may shrink to 5½ per cent of GDP in 2015. The unemployment rate is projected to fall to 5% at the end of 2015, generating some inflation pressure.
Fiscal policy should remain neutral, consistent with the fiscal rule for the central government. Reducing high leverage among systemically important banks could strengthen confidence and make the recovery more resilient to financial shocks. The establishment of one-stop shops for business start-ups is welcome and should facilitate more dynamism in Germany’s domestic economy. Structural reforms to deregulate professional services, remove barriers to full-time female employment and further improve access to tertiary education would all strengthen growth and contribute to global rebalancing.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.