The German economy made a good start in 2018 following a strong performance in 2017, when it grew by 2.2% (price-adjusted). The current cyclical indicators suggest that the long-running expansion is set to continue. New manufacturing orders are continuing to point upward, and are far higher than they were a year earlier. They are being driven by orders from abroad. Industrial output is also high and developing positively. The indicators of market sentiment suggest that the economy will do well in the coming months, even if the ifo Business Climate Index has recently dropped appreciably. The reason for this is the trade policies of the United States, which have dampened the mood amongst German exporters. The strong euro is also surely playing a part. In the long-term comparison, however, the business climate remains good in view of a positive growth outlook for the global economy and favourable financing conditions in Germany.
Three times a year, the Federal Government submits a projection of the overall economic development in Germany under the lead responsibility of the Federal Ministry for Economic Affairs and Energy. The annual projection is published by the Federal Government each January as part of the Annual Economic Report. The spring and autumn projections serve as basis for the Working Party on Tax Revenue Forcasting to estimate the tax revenues. The budgets of the Federal Government, the Länder, municipalities and social insurance funds are based on the forecast key overall economic figures. Information provided by the European Union in the context of the Stability and Growth Pact is also based on these projections.
The Federal Government forecasts the economic development in the short term and in the medium term and the production potential. These estimates serve as basis for the calculation of the maximum annual net new borrowing in the context of the 'debt brake' under Articles 109 and 115 of the German Basic Law.
Selected key figures for macroeconomic trends in the Federal Republic of Germany [1]
| 2016 | 2017 | 2018 | |
| 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 | 2,1 2,2 2,7 | 2,0 3,5 2,6 | 1,9 5,0 2,8 |
| Domestic demand | 2,4 | 2,2 | 2,3 |
| 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 employee | 2,5 | 2,7 | 2,9 |
[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);
