Germany Economy

Economic growth:

Surging exports while globalization was at its peak in the mid-2010s propelled strong economic growth in 2014-17. However, in more recent years the economy has been weighed on by rising trade tensions, weak demographics, slow adaptation to emerging technologies, supply restraints and soft global goods demand in the wake of the pandemic. Germany's economy markedly underperformed the G7 average in 2021-23. To read more about GDP growth in Germany, go to our dedicated page.

Fiscal policy:

Germany displayed strong fiscal discipline from 2013 to 2019, achieving budget surpluses through prudent spending and robust economic growth. This fiscal strength allowed Germany to implement substantial fiscal stimulus in response to the COVID-19 pandemic without significantly harming its overall fiscal position. By 2022, Germany's focus was on returning to pre-pandemic fiscal norms, balancing the need for improving competitiveness and boosting defense spending with its longstanding commitment to fiscal stability and debt reduction. Find out more on our dedicated page.

Unemployment:

Germany's unemployment rate over the last decade remained notably lower than the Euro area average, showcasing the country's effective labor policies. Even during the COVID-19 pandemic, Germany's unemployment rate increased only marginally, thanks to strong social safety nets and job support schemes. For more information on Germany's unemployment click here.

Inflation:

Germany faced generally low inflation rates over the last decade, often below 2%, reflecting large manufacturing capacity and low inflation expectations. That said, the picture has changed notably since the pandemic: Inflation was well above the European Central Bank's 2% target in 2022 and 2023, due to global supply pressures, a strong bounce-back in economic activity, a rise in protectionism and the reduction of Russian gas flows. Go to our Germany inflation page for extra insight.

Monetary Policy:

In Germany, monetary policy is determined by the European Central Bank (ECB). The European Central Bank (ECB) maintained historically low policy rates from 2013 to 2021, reflecting prolonged economic sluggishness and low inflation in the Euro area. By 2022 however, the focus had shifted towards normalizing policy in response to economic recovery and rising inflation, with policy rates hiked to an over decade high. See our Germany monetary policy page for additional details.

Exchange Rate:

Germany is part of the Euro area single currency bloc. The euro saw volatility over the last decade in response to changes in global risk sentiment, and relative interest rates in the U.S. vs Europe. That said, the euro has tended to depreciate vs the dollar, likely on higher safe-haven demand and the United States' economic outperformance relative to the Eurozone. For more info on the euro, click here.

Contractions in private spending and fixed investment and a deterioration in net trade drove a sequential downturn in GDP in Q2. Shifting to Q3, our panel expects growth to have remained elusive. Manufacturing likely remained the main drag on growth: Output fell from Q2 levels in July–August, and PMI data suggests a further deterioration in September. Moreover, elevated interest rates likely continued to stifle investment. On a brighter note, goods exports rebounded in July–August, while surging real wage growth in July and lower inflation in Q3 hint at healthier private spending; retail sales strengthened from Q2 in July–August. In other news, on a visit to Central Asia in mid-September, Chancellor Scholz inked multiple joint investment projects worth over EUR 50 billion with Kazakhstan and Uzbekistan, the latest in a series of efforts by EU members to reroute trade from Russia.

Projections out to 2034.

57 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 58 expert analysts.

Want to get insight on the economic outlook for Germany in the coming years? FocusEconomics collects projections out to 2034 on 57 economic indicators for Germany from a panel of 58 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Germany economy. To download a sample report on the Germany's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.