Federal Minister for Economic Affairs Sigmar Gabriel; Source: BMWi/Andreas Mertens

Federal Minister for Economic Affairs, Sigmar Gabriel

© BMWi/Andreas Mertens

The federal cabinet adopted today the 2017 Annual Economic Report entitled "For inclusive growth in Germany and Europe".

Federal Minister for Economic Affairs and Energy Sigmar Gabriel said:

"The German economy is in very good shape. The Federal Government expects the growth trend to continue this year with a 1.4 % increase in the price-adjusted gross domestic product. The slight fall-off in the rate of growth compared with last year is largely due to the effect of a smaller number of working days this year. The growth is "growth for all", "inclusive growth". Despite the remarkably good economic situation, many people are concerned about their own economic future, and also about society as a whole. The policy-makers' response to this must be to strengthen cohesion, to enable people to participate, and to put them in a position to take responsibility for living their lives.

We have already achieved quite a lot. This can particularly be seen in the participation of more and more people on the labour market. Last year, the number of people in employment rose to a total of 43.5 million, around 1.5 million more than in 2013. This year, another 320,000 people will be able to find a job. At 6.1 %, last year's unemployment rate was the lowest since our country reunified in 1990.

At the same time, real net wages and salaries per employee have increased by more than 1.5 % a year in real terms since 2013. In 2017, an average employee will have more than €2,000 more in his or her pay packet than when this government took up office. The minimum wage has also improved the income situation of four million low-paid workers – and thus the preconditions for inclusive growth. Many low-earners in particular have been able to move into regular employment requiring compulsory social insurance payments.

However, we cannot relax in view of this good development. Rather, we now need to put the correct policies in place for the future. Digitalisation is bringing about a phase of fundamental change. We cannot afford to stand still and just focus on saving money. We need to make fresh efforts: we can only win the future if we launch a massive, bold investment package. In a time budgetary surpluses, when we have financial scope to act, we need to give priority to investment. That is the only way to safeguard Germany's future competitiveness."

Selected key figures for macroeconomic trends in the Federal Republic of Germany [1]2015 2016Annual projection
2017
Percentage change on preceding year

Gross domestic product (GDP), output approach

GDP (real)

Total employment

Unemployment rate in % (Federal Employment Agency definition) [2]


1,7
0,9
6,4

1,9
1,0
6,1

1,4
0,7
6,0
GDP by expenditure (real)
Private consumption expenditure
Machinery and equipment
Construction

2,0
3,7
0,3

2,0
1,7
3,1

1,4
1,2
1,9
Domestic demand1,62,21,6
Exports
Imports
External balance of goods and services (contribution to GDP growth)[3]
5,2
5,5
0,2
2,5
3,4
-0,1
2,8
3,8
-0,1
Total gross wages and salaries per employee2,72,52,5

[1] Up to 2016 results of the Federal Statistical Office; National Accounts Status: January 2017.
[2] In relation to the total labour force.
[3] Absolute change (stocks/external balance) in per cent of pre-year GDP (=contribution to change in GDP).

A sustainable and forward looking economic and fiscal policy must keep its focus on laying the foundations for tomorrow's prosperity. These include the challenges of demographic change to our fiscal viability and the maintenance and expansion of our public infrastructure. Since 2014, the Federation has not taken on any new debt. At the same time, the Federal Government is particularly using the scope available to it to undertake additional investment. In total, federal investment has risen by well over a third since the beginning of the legislative term, to €36.1 billion in the 2017 federal budget. The federal budget itself only rose by just under 7 % in the same period. Also, the Federal Government has done a lot to lessen the burden on the Länder and municipalities.

Further to this, the Federal Government is improving the preconditions to enable companies to survive unaided in an environment shaped by globalisation and digital transformation and to develop new fields of business. To this end, it is for example adapting the rules on competition to the demands imposed by the advance in digitalisation, reducing the burden of red tape on business, strengthening young, innovative companies by increasing the range of venture capital available, and helping small and medium-sized enterprises in particular to utilise the potential of digitalisation.

Overall corporate investment activity will increase in Germany this year, but will remain restrained. This is because the risks, particularly from the external economic environment, remain considerable. World trade could be hampered by protectionist tendencies. This reduces the prospects for exports and thus also the propensity for companies to invest in equipment and buildings.

Federal Minister Gabriel said: "As a globally integrated country, Germany is fundamentally reliant on open markets and free trade. The tangible global tendency towards protectionism, as reflected in the Brexit vote and the comments made by the new U.S. president, is the wrong way forward. Isolation makes everyone poorer."

The Federal Government works not least towards a fair regime for international economic relations. It will use its G20 Presidency this year to initiate a debate on the opportunities and risks of globalisation.