Better marks for Germany

OECD Observer

The German economy is at last emerging from a three-year period of near stagnation. Domestic demand had been shrinking over the last couple of years, as a poor labour market performance weighed down on consumer and business confidence. But, as the latest OECD Economic Survey of Germany points out, a strong and competitive export industry is helping the OECD’s third largest economy recover its strength as world trade growth expands more rapidly.

Private consumption should firm up as disposable incomes rise on the back of phased income tax cuts. Personal outlays for some routine healthcare expenses will rise as part of current cost-cutting reforms, and some indirect taxes are being raised as Germany reins in its fiscal deficit.

Overall, the latest Economic Survey of Germany expects rising demand at home and abroad to lift profits and feed into stronger investment in machinery and equipment. Construction, though, should remain in the doldrums, and the survey sees no rapid turn-around in the labour market.

For more than ten years real GDP growth has lagged that of some other OECD countries. Sure enough, productivity has grown in what continues to be a highly innovative economy, but it has not risen fast enough to compensate for the weaker contribution to growth from employment. In fact, there has been a rise in unemployment, caused mainly by structural blockages in the economy, with high overall wage costs and tight legislation weighing down on labour. Even when business is up, these obstacles make employers think twice before hiring new workers.

The government is taking action. Reforms to reduce barriers for higher employment and other structural reforms under Agenda 2010, affecting pensions and competition for instance, are to be welcomed. However, the survey urges these reforms to be broadened further to reduce government debt, remove fiscal distortions and make the labour market more responsive to supply and demand.

While German innovation remains among the world’s best, it has slipped back a little in recent years. Restoring it demands measures to reignite German entrepreneurship, and the report points to “considerable scope” to foster the creation of new enterprises and deepen competition.

The 150-page OECD Economic Survey on Germany comes complete with basic statistics, graphs and tables. As well as analysis on the German business cycle, chapters cover issues arising from unification, public sector reform, fiscal consolidation, employment, competition and innovation.

OECD Economic Surveys are published for all member countries as well as selected non-members. They are a reference for economists, business analysts and policymakers the world over. Other recent surveys have been published on the Euro area, the Netherlands and non-member Russia.

©OECD Observer No 244, September 2004

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Subscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • MCM logo
  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2019