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Expansion Continues to Be Strong

The business cycle upswing in Germany has gained strength and breadth. In addition to private consumption, the expansion is now also supported by investment and foreign trade. The latter benefits from growing exports to the euro area, where the economy is gaining momentum. Since the euro area upswing rests on solid fundamentals, the ECB should be able to start tapering without putting the economy at risk.

28. September 2017

Authors Roland Döhrn Ferdinand Fichtner Oliver Holtemöller Stefan Kooths Timo Wollmershäuser

Suggested Reading

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Upturn Remains Robust — Amid Mounting Tensions: Joint Economic Forecast Autumn 2017

Projektgruppe Gemeinschaftsdiagnose

in: Externe Monographien, 2017

Abstract

The German economic upturn has gained both in terms of strength and breadth. In addition to consumer spending, external trade and investments are now also contributing to economic expansion. These are the conclusions drawn by the economic research institutes in their autumn report for the German federal government. Whereas the very high economic momentum in the first half of the current year will slow slightly, expansion of economic output this year and next will exceed production capacity growth. As a result, overall capacity utilization will increase, with economic output exceeding potential output. Gross Domestic Product is likely to grow by 1.9 percent this year and by 2 percent in 2018 (calendar-adjusted: 2.2 and 2.1 percent, respectively).

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