German Growth

Time for a New Business Model

ARCHIV - ILLUSTRATION - Zwei Personen tragen am 20.02.2015 Einkaufstüten durch ein Einkaufszentrum in Berlin. Foto: Elisabeth Rahe/dpa (zu dpa "Konsumlust lässt Kassen klingeln: Bilanz der Einzelhandelsgeschäfte" vom 07.01.2016) +++(c) dpa - Bildfunk+++
German growth will be driven by consumer spending.
  • Why it matters

    Why it matters

    The German economy appears to be doing well, but its traditional, export-oriented business model is faltering.

  • Facts


    • Consumer spending was the strongest driver of growth in the German economy in 2015.
    • The German economy is a heavily export-oriented economy.
    • Additional government expenditures triggered by the wave of immigration in 2015 will generate short-term growth.
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The German Federal Statistical Office will present its preliminary economic report for 2015 on Thursday. With a growth rate of 1.7 percent, the German economy has seen its strongest growth since 2011. In addition, the government has achieved an increase in revenues amounting to 0.75 percent of the gross domestic product (GDP). Arithmetically, the tax authorities could have managed without the solidarity supplement and the inheritance tax without endangering the balanced budget. And, as we know, employment was higher and unemployment lower than they have been since German reunification. From a macroeconomic perspective, we can apparently sit back and relax.

But the first impression is deceiving, because the traditional German business model is beginning to falter. The contribution of foreign trade to growth was likely modest in 2015, almost a disgrace for many who long prided themselves in Germany’s reputation as the “world export champion.”

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