Die wirtschaftliche Entwicklung im Inland: Konjunktur-Hoch hält an, aber Wolken am Horizont
The German economy is currently in a favorable economic situation. In 2017, GDP persistently grew at a rate higher than potential output. Thus, the output gap became increasingly positive. Despite of the real appreciation of the Euro, the contribution of net exports to growth gained importance. Private consumption, on the contrary, stagnated in the second half of the year, after a strong increase in the first half. Growth of investment in construction seems to face capacity restrictions. Indicators suggest that GDP also grew strongly in the first quarter of 2018. Thereafter, the expansion is expected to be somewhat moderate. The reasons are shortages in the labor market, the increased uncertainty among companies about future access to important export markets, and the latest appreciation of the Euro, which is likely to subdue export growth. In sum, we expect GDP to grow by 2.4 per cent in this year. Working day adjusted the rate is slightly lower than in 2017, which was boosted by a particularly low number of working days. For 2019, we forecast GDP to grow by 1.9 per cent. Under these conditions, employment will continue to grow but with diminishing rates. Firstly, production and thus labor demand will increase more slowly. Secondly, the high and increasing number of vacancies indicates that companies face problems recruiting staff. The unemployment rate will go down to 5.2 per cent in this year and to 5.1 per cent in the next year. Despite of shortages in the labor market, the pace of consumer price inflation has not speeded up yet. On the producer level, prices have begun to increase faster. On the consumer level, however, this has not yet become visible, in particular due to the appreciation of the Euro, which has negative effects on import prices. Over the forecast horizon, wages and labor costs will increase, and consumer prices will increase slightly stronger. We forecast annual inflation to reach 1.9 per cent in 2019 after 1.8 per cent in this year. The fiscal balance improved markedly in 2017. The surplus climbed to € 36.6 bn after € 25.6 bn in the preceding year. Despite the slightly expansionary fiscal stance, the budget balance is expected to reach € 40 bn in the current year. This is due to the favorable economic situation, which will result in higher income, and one off payments caused by the abolition of the nuclear fuel tax. For 2019, the new government announced some fiscal measures that will reduce the fiscal surplus to € 29 bn. The most important downside risk for Germany is the future access to important export markets. The U.S. share in German exports was 8.7 per cent. Thus, trade policy measures taken by the U.S. would have a considerable impact on the German industry, let alone that other countries could take trade measures in reaction to U.S. policies. Furthermore, the trade relations to the UK after the Brexit are still unclear. UK’s share in German exports was 6.6 per cent in 2017.
Döhrn, R., G. Barabas, B. Blagov, A. Fuest, H. Gebhardt, R. Jessen, M. Micheli, S. Rujin and L. Zwick (2018), Die wirtschaftliche Entwicklung im Inland: Konjunktur-Hoch hält an, aber Wolken am Horizont. RWI Konjunkturberichte, 69, 1, 41-103