One year ago, Germany faced calls to boost its sluggish corporate and public investment, with critics warning that bridges, roads and many public buildings were in urgent need of repair. The government was accused of being too focused on balancing its budget, and neglecting necessary investments as a result.
The government responded. In spring 2015, a panel of experts set up by Economics Minister Sigmar Gabriel presented a “10-point plan for more investment, growth and jobs.” To be sure, not much has happened since then. Even without the action plan, investments rose by 1.7 percent in the first quarter of 2015 from the previous quarter – only to fall slightly in the following two quarters.
It’s hard to predict and steer investments in a market economy. Investment decisions hinge on business expectations and can rapidly be changed by geopolitical events. It comes as no surprise that in light of the Greek crisis, China’s market turmoil and fears of terrorism, some investors shelved planned projects last year.
But there are good chances that investment will pick up again in 2016. According to a survey by the Munich based Ifo Institute, German business plans to boost investment by 6 percent in 2016.