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Article - Economic Situation and Cyclical Development

Economic Situation and Cyclical Development


The German economy is gradually emerging from its slowdown. For 2020, the Federal Government expects an annual average increase in gross domestic product of 1.1% in price-adjusted terms. Economic dynamism remained restrained at the beginning of 2020. In the course of the year, the economy is likely to pick up some slight momentum.

The economic development is essentially split: a robust domestic economy – bolstered by rising incomes, tax relief and dynamic public-sector spending – contrasts with the cyclical weakness of export-oriented industry. In the course of the year, however, industrial production is also likely to slowly recover. The headwinds from the external economic environment will weaken as global trade recovers. In the course of the year, the cyclical dynamism of the German economy is likely to increase significantly.

Three times a year, the Federal Government submits a projection for Germany’s overall economic development 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 a basis for the Working Party on Tax Revenue Forecasting to estimate the tax revenues. The budgets of the Federal Government, the Länder, municipalities and social insurance funds are based on the key overall economic figures that are forecast. The information provided to the European Union in the context of the Stability and Growth Pact is also based on these projections.

The Federal Government forecasts short-term and medium-term economic development and the production potential. These estimates serve as the 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. You can find projections from preceding years in the Archive (in German).

For the most recent estimate contained in the 2020 annual projection, please click here.

Key figures of the 2020 annual projection

Macroeconomic trends in the Federal Republic of Germany [1]2019Annual projection
Percentage change on preceding year unless indicated otherwise
OUTPUT side of gross domestic product (GDP)
GDP (price-adjusted)0,61,1
Gainfully active persons (domestic)0,90,4
GDP per gainfully active person-0,30,7
GDP per hour worked0,10,2
For information purposes:0,00,0
Unemployment rate in % (according to ESA) [2]3,02,9
Unemployment rate in % (as defined by Federal Employment Agency) [2]5,05,0
GDP by EXPENDITURE in current prices (nominal)
Consumption expenditure
Private households and private non-profit-making organisations2,92,7
Public sector5,04,5
Gross fixed capital formation5,44,6
Changes in inventories and net acquisition of valuables (€ bn)-10,6-12,6
Domestic demand2,93,5
Net foreign demand (€ bn)207,8196,1
Net foreign demand (in % of GDP) [7]6,05,5
Gross domestic product (nominal)2,72,9
GDP by EXPENDITURE in price-adjusted terms (real)
Consumption expenditure
Private households and private non-profit-making organisations1,61,3
Public sector2,52,3
Gross fixed capital formation2,51,7
Machinery and equipment0,40,6
Other investment2,73,0
Changes in inventories and net acquisition of valuables (contribution to GDP growth) [3]-0,90,0
Domestic demand1,01,6
Net foreign demand (contribution to GDP growth) [3]-0,4-0,4
Gross domestic product (real)0,61,1
Price trend (2015 = 100)
Consumption expenditure by private households [4]1,31,4
Domestic demand1,81,9
Gross domestic product [5]2,21,8
INCOME side of gross national income (GNI)
(Resident concept)
Employee remuneration4,53,5
Corporate and investment income-2,91,2
National income2,32,9
Gross national income2,92,9
For information purposes (resident concept):
Gross wages and salaries4,43,4
Gross wages and salaries per person employed3,22,7
Disposable income of private households2,82,8
Savings ratio in % [6]10,911,0

[1] Up to 2019 provisional figures from the Federal Statistical Office; current as at January 2020
[2] In relation to the total labour force
[3] Absolute change (stocks/external balance) in % of GDP in preceding year (= contribution to change in GDP)
[4] Year-on-year changes in the consumer price index: 2019: 1.4%; 2020: 1.5%
[5] Year-on-year changes in unit labour costs per person employed: 2019: 3.6%; 2020: 2.2%
[6] Savings in % of disposable income of private households, including occupational pensions claims
[7] Current-account balance: 2019: +7.4%; 2020: +6.7%

Key figures on the situation of the German economy

Symbolicon für Wachstumskurve

per cent rise in gross domestic product (GDP)
in 2020 compared with the preceding year

Symbolicon für Lastenwagen

per cent rise in exports
in 2020 compared with the preceding year

Symbolicon für Geld

per cent rise in consumer spending
in 2020 compared with the preceding year

Symbolicon für Arbeiter

thousends more people in work
in 2020 compared with the preceding year

Current situation

The Economic Situation in the Federal Republic of Germany in July 2020

Following the relaxation of the measures to protect against infection in Germany and abroad, the German economy has begun a tangible recovery. However, the process of recovery is only just beginning. Capacity utilisation is still low. Industrial production has bottomed out. The rise in new orders points to industrial activity picking up in the coming months. Risks do exist, however, particularly as the increase in demand from the non-eurozone is only very slight. The pandemic-related problems on the labour market are also declining. The rise in unemployment in June, at +69,000 people compared with May, was much weaker than that seen in the preceding months. According to initial estimates by the Federal Employment Agency, around 6 million people were on short-time work in May, down from 6.8 million in April. The leading indicators have recovered to some extent following the collapse in the preceding months.


Economic activity has bottomed out. After an unprecedented slump in April, things improved in May. The cyclical indicators published over the last month are sending out two signals: the German economy is experiencing a tangible recovery, but capacity utilisation remains very low. [1] The relaxations of measures to protect against infections in Germany and abroad are permitting demand and supply to rise. The industrial sector reported an increase in output of +10.3% between April and May. There was a particularly sharp rise in the production index for vehicles and vehicle parts. According to the German Association of the Automotive Industry (VDA), June saw further increases; both new registrations (+18%) and production (+84%) were up from the May figures. Going forward, further improvements seem likely; the ifo and PMI indexes, as well as the level of new orders, are all pointing upwards. The recovery also embraced parts of the services sector. This is shown e.g. by the development in the retail trade (excluding vehicles), for which the May sales figures are now available: rising by 13.9%, the contrast to April was very pronounced. In the second half of the year, additional incentives to purchase are created by the temporary cut in value-added tax. Despite the macroeconomic recovery, the Federal Statistical Office is likely to report a clearly negative rate of change in gross domestic product on 30 July for the second quarter as a whole. This will primarily be due to the unprecedented slump seen in April. Positive figures for the gross domestic product will not come until the third quarter. Whilst the process of recovery in the German economy is dynamic, it is only just beginning. Capacity utilisation is still low. Industrial output in May was only at around 75% of its pre-coronavirus level; in the automotive sector, the figure was just less than 50% (approx. 74% in June according to VDA). Key factors influencing the future course of the macroeconomic recovery will include the pace of the recovery in foreign demand for German goods. The month of May did see a sharp (nominal) rise of 11.6% in exports of goods. But exports to key trading partners which have been particularly badly affected by the pandemic (e.g. the United States and the United Kingdom) are trending less strongly than those to other partners (e.g. China). There are also disparities in the levels of orders coming from abroad. Orders from the eurozone are indicative of a recovery, but the sluggish improvement in orders from outside the eurozone underline the risks posed to the German economy by the global economic situation.

For more information about the economic situation in July, please click here.

Latest press releases

Press releases

  • 17/04/2019 - Press release - Economic Situation and Cyclical Development

    Minister Altmaier: Slow period is over, but should serve as a warning: we need to keep improving the business environment.

    Open detail view
  • 30/01/2019 - Press release - Economic Situation and Cyclical Development

    Minister Altmaier: To develop the economy, we need to focus on stimulating growth and on technologies for the future

    Open detail view

Further information

Graph on the subject of Economic Development; Source: