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

E-Newsletter

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

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • 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.
  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • 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.
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • 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 www.oecd.org/careers .

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 2017