The upswing in the German economy is continuing. For the current year, the German government expects a GDP increase of 1.8% (in price-adjusted terms). Growth of 1.8% is also expected for 2019.
“The German economy is still on the upswing, and will enter its tenth successive year of expansion next year – that is the longest period of uninterrupted growth since 1966, and the second-longest ever. The people of our country are benefiting from the good . Employment will increase to more than 45 million in 2019, and unemployment will fall to a new record low. Rising wages and a reduction in taxes and charges on individuals will ensure that incomes expand significantly. This means that the domestic economy will continue to be an important pillar of economic development. Uncertainties about the future development derive from the increasing protectionist tendencies and the international trade conflicts. They damage all the parties involved. We therefore have a great interest in a rapid implementation of the joint declaration by Commission President Juncker and President Trump to resolve the trade conflict between the U.S. and the EU. We need to reduce – and not raise – tariffs and trade barriers: both sides will benefit from this.”
- The global economy is likely to lose some momentum during the reference period, also according to estimates by international organisations. Exports of goods and services from Germany are therefore expected to see relatively moderate growth.
- Imports will increase significantly due to strong domestic demand. In purely arithmetical terms, therefore, foreign trade is expected to make a slightly negative contribution to growth.
- The current account surplus is continuing to fall, and will drop to 7.1% by 2019.
- In view of a high level of capacity utilisation, German companies are continuing to invest in plant and machinery.
- Construction investments remain strong due to low interest rates and high demand on the market. Public-sector investment is being increased significantly in both this and next year. However, the construction industry is increasingly reaching its capacity limits.
- Employment is set to rise to an annual average level of 45.3 million in 2019. In view of the high demand for labour, a further drop in unemployment is expected, with the unemployment rate falling to a post-reunification low of 5.0%. At the same time, income levels will rise significantly. This also lays the foundation for dynamic consumer demand.
- In the course of a slight over-utilisation of capacity, the inflation rate will rise. Consumer prices will increase at rates of 1.9% this year and 2.0% next year.
In its autumn projection, the Federal Government is revising its projection for this and next year downwards. A major reason for this can be found in the weaker external economic environment. Also, the new WLTP test cycle for car emissions has resulted in delays in type approvals, which is having a negative impact on production and exports. Finally, the revision of the National Accounts means that the figures from which this year started are slightly less favourable.
The final consultations on the Federal Government’s Autumn Projection were concluded on 11 October 2018 within the framework of the Interministerial Working Group on Macroeconomic Forecasting, which was chaired by the Federal Ministry for Economic Affairs and Energy. The Federal Statistical Office and the Deutsche Bundesbank were also involved.
The key macroeconomic figures contained in the autumn projection form the basis for the tax revenue forecast, which will be compiled in Hamburg on 23-25 October 2018. These figures provide a general framework for drafting the budgets of the Federal Government, the Länder, municipalities and social insurance funds.
Key figures in the 2018 autumn projection
|GDP by expenditure (adjusted for price) ||2017||2018||2019|
|Year-on-year change (in per cent)|
|Gross domestic product||2,2||1,8||1,8|
|Private consumption ||1,8||1,6||2,0|
|Gross fixed capital formation||2,9||3,0||2,7|
|- of which equipment||3,7||4,5||2,6|
|Private consumption ||1,6||1,7||1,9|
|Gross domestic product||1,5||1,7||2,0|
|Gainfully active persons (domestic)||1,4||1,3||0,9|
|By way of information:|
|consumer price index||1,8||1,9||2,0|
|absolute figures (millions)|
|Gainfully active persons (domestic)||44,3||44,9||45,3|
|Unemployed persons (Federal Employment Agency)||2,53||2,35||2,24|
 Up to 2017 provisional figures from the Federal Statistical Office; as of August 2018
 Including non-profit-making organisations