Germany: Unemployment edging down

After slowing in the second quarter, growth has picked up in the third quarter on the back of strong domestic demand. The output gap is likely to be almost closed. Growth is projected to advance at near trend rates during 2008 and 2009. Following some near-term headwinds, unemployment may continue to edge down but at a much slower pace than in the recent past. The slower projected expansion largely reflects a diminishing contribution from net exports that is not fully compensated by stronger private consumption.

Helped by strong revenue increases, the general government budget is projected to reach balance this year. In 2008, fiscal policy will turn slightly expansionary due to the corporate tax reform. Further pro-cyclical easing should be avoided. As the supply of skilled labour will become a bottleneck, the government should avoid taking any measures that could impede incentives to take up work.

©OECD Observer No. 264/265, December/January 2008

OECD Economic Outlook No. 82, December 2007   
All OECD Observer articles on Germany

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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