Facts, Fantasy

Still in the Export Business

Hamburg port source thomas raupach_effect
Still in the business.
  • Why it matters

    Why it matters

    If Germany is moving from being an export economy to one driven by spending, it would lose market share to its European partners and its growth could slow.

  • Facts

    Facts

    • The Ukraine crisis, a possible Grexit, and the new minimum wage law in Germany haven’t derailed the country’s economy.
    • Many E.U. members, the United States and international groups such as the IMF want Germany to consume more and export less in order to help its trade partners.
    • Even a short-term analysis doesn’t show the significance of private consumption has markedly increased.
  • Audio

    Audio

  • Pdf

The year started well for the German economy with good news from the labor market and strong early indicators for industry and consumption.

Many bank analysts and research institutions have accordingly revised their economic growth forecasts upward for 2015. The new consensus is 2 percent.

Geopolitical risks such as the Ukraine crisis, speculation about a “Grexit” and the introduction of a minimum wage haven’t derailed the German economy.

Most commentators identify a boom in consumer spending as the major reason for the powerful upsurge. The economy is receiving impetus from a vigorous rise in real wages along with higher employment, and from greater purchasing power because of the low price of oil. The Kiel Institute for the World Economy is predicting the strongest increase in private spending since 1992: 2.7 percent.

Many economists interpret this as a paradigm shift and say a fundamental change in the German economic model is possible, oriented away from exports, towards consumption.

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