Germany Economic Snapshot

Going for Growth 2021 - Germany

The pandemic is likely to accelerate digitalisation with new business models and increases in demand for teleworking, telehealth services and remote learning. The energy transition requires changes in behaviour, consumption and production. In order to face these challenges while supporting the recovery, Germany needs to boost investment in infrastructure and knowledge-based capital, revive business dynamics and address skills bottlenecks.

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2021 Structural Reform Priorities

  • Infrastructure: Boost infrastructure investment
  • Competition and regulation: Promote reallocation by removing barriers to firm growth and incentivising investment in expanding industries
  • Education and skills: Strengthen skills to cope with technological change
  • Labour market: Make it easier for parents to choose flexible working hours
  • Tax system: Reduce tax wedges on labour income and shift taxation towards less distortive taxes


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Economic Survey of Germany (December 2020)

Executive Summary



Economic Forecast (December 2020)

Activity is projected to contract by around 5½ per cent in 2020, driven by falling private consumption, business investment and exports. Growth is set to recover slowly to 2.8% in 2021 and 3.3% in 2022. Private consumption and exports initially rebounded rapidly, but demand for services will stay weak into 2021 as virus containment measures have been tightened. Further uncertainty will constrain the recovery of investment as well as demand for capital goods exports before general deployment of a vaccine increases confidence. Short-time work has cushioned the increase in unemployment, but sustained falls in the unemployment rate are not expected until after mid-2021, once employees on short-time work have been reabsorbed.

Strong fiscal support has protected jobs and firms in 2020 but the rate of fiscal consolidation needs to be carefully managed. Additional targeted support is merited in 2021 and 2022 to reduce taxes for those on low incomes, increase research and development, support job placement and training, and deliver infrastructure needed for digital transformation and the energy transition.

Going for Growth: Economic Policy Reforms (July 2019)

Reform Prioritäten (2019)