The German economy’s enviable combination of strong growth, low unemployment, favorable financing conditions, and large budget surpluses masks long-term vulnerability. To place the economy on a stronger footing – and to help pull Europe out of its malaise – will require substantially higher public and private investment.
BERLIN – The German economy appears unstoppable. Output is expected to grow by more than 2% this year, and wages by 3%, with the current-account surplus set to reach a towering 8.4% of GDP. Unemployment has been halved over the last decade, and now stands at an all-time low. German exporters remain highly innovative and competitive. And the government is recording a sizeable budget surplus. While the rest of Europe remains mired in crisis and self-doubt, Germany’s future seems bright and secure. But appearances can be deceiving.
BERLIN – The German economy appears unstoppable. Output is expected to grow by more than 2% this year, and wages by 3%, with the current-account surplus set to reach a towering 8.4% of GDP. Unemployment has been halved over the last decade, and now stands at an all-time low. German exporters remain highly innovative and competitive. And the government is recording a sizeable budget surplus. While the rest of Europe remains mired in crisis and self-doubt, Germany’s future seems bright and secure. But appearances can be deceiving.