Federal Minister Brigitte Zypries

© BMWi/Susanne Eriksson

On January 31, the Federal Government adopted the 2018 Annual Economic Report, which was tabled by Federal Minister Brigitte Zypries and is entitled “A strengthened economy ready to embrace the future”.

Said Minister Zypries: “The German economy is in very good shape. The Federal Government is expecting GDP growth of 2.4% after adjustment for inflation, which means that the upswing is set to continue. The good news is that the number of persons working in jobs subject to social security contributions rose strongly last year, by more than 700,000. And employees in Germany are benefitting from the economic upswing. Real net wages and salaries per employee have risen by an average of more than 1.6% per year since 2013. Germany is closely intertwined with its neighbours, which is why our economy will prosper the most when Europe is successful, developing well and reforming itself where this is necessary.”

According to the Federal Statistical Office, the number of gainfully active people in Germany was approx. 44.3 million last year, which is an all-time high. This year, another 490,000 people are likely to find employment. At 5.7%, last year’s unemployment rate was the lowest since Germany’s reunification in 1990.

Selected key figures for macroeconomic trends in the Federal Republic of Germany [1]

2016 20172018
Percentage change on preceding year
Gross domestic product (GDP), output approach
GDP(real)
Total employment
Unemployment rate in % (Federal Employment Agency definition) [2]

1,9
1,3
6,1

2,2
1,5
5,7

2,4
1,1
5,3

GDP by expenditure (real)

Private consumption expenditure
Machinery and Equipment
Construction


2,1
2,2
2,7

2,0
3,5
2,6

1,9
5,0
2,8
Domestic demand2,42,22,3
Exports
Imports
External balance of goods and services (contribution to GDP growth) [3]
2,6
3,9
-0,3
4,7
5,2
0,2
5,3
5,8
0,2
Total gross wages and salaries per employee2,52,72,9

[1]Up to 2017 provisional results of the Federal Statistical Office; National Accounts Status: January 2018;
[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);

The Federal Government has used its economic policy to allow the German economy to grow to its full potential and maintained these efforts through to the end of the last parliament. The Federal Government has tackled present and long-term challenges including demographic change, digitisation, globalisation and climate change, and designed its economic policy to be forward-looking. The government has been guided by the principle of inclusive growth that allows all of society to play a role in this.

Recent years have shown that it is possible to consolidate public-sector budgets whilst also investing more. Germany has not taken on any additional federal debt since the beginning of the parliament before last. It is likely that this year will also end with a public-sector surplus. This comes at a time when federal investments have risen by some 45% to €35.1 million (figures for the period between 2013 and 2017). The Federation has also eased the burden on the Länder and the municipalities, which foot the bill for approx. two thirds of Germany’s public-sector investment. This has given them more scope for additional investments. The proposed revision of the rules governing fiscal relations between the federal and Länder governments will see a large amount of financial relief for the Länder, starting with approx. €9.7 billion in 2020. In addition to this, the Federation doubled the volume of the municipal investment funds to now €7 billion.

The Federal Government has also improved the framework for private-sector investment, not least by giving innovative start-ups better access to venture capital. The INVEST programme has been topped up and the High-Tech Start-Up Fund III established. Moreover, the Federal Government has cut red tape. A new ‘one in, one out’ rule and the Second Cutting Bureaucracy Act have substantially brought down compliance costs for companies. Furthermore, the Federal Government has improved the business environment and amended competition and procurement law. The Ninth Act against Restraints of Competition has been adjusted and updated for the digital age. Procurement law has been reformed and an Ordinance for Public-sector Purchasing below the Relevant Thresholds introduced, which has helped improve the public procurement framework.

Open markets generate growth and skilled jobs, including in Germany. This is why the Federal Government has refused to bow to protectionist interests. It has used its G20 Presidency and other forums to advocate a rules-based international trading system and open markets at national level, in Europe, and around the world. In addition to these efforts, the Federal Government is working with its European partners, and especially France, to help Europe prepare for the challenges ahead. In particular, this applies to the debate about the future of the EU and the future development of the economic and monetary union.

You can find the Annual Economic Report here (in German).