The Rising Economy
Germany, Europe’s largest economy, has overtaken UK as the fastest growing among the G7 states last 2016, and this year, it seems to be getting stronger. Germany’s leading economic institutes had forecast growth of 1.5% in 2017, comparing from their September prediction of 1.4% and after a 1.9% growth posted in 2016.
Despite the economic and political turmoil that has been circling the EU, the German economy is currently living a period of strong relative economic performance. The strong economic showing has not failed to strengthen the labor market. The unemployment rate now sits at a 26-year low of 5.8% in March 2017, below the 5.9% registered in February.
There were also projections of continued increase in employment, with the total workforce expected to increase by 1 million people in both 2017 and 2018. Thanks to the strong economy, Germany’s unemployment rate will fall to 5.7% this year and to 5.4% in 2018. The predictions come as Germany is heading to the ballots this September, which Chancellor Angela Merkel hopes to win amid a strong economic track record and by pledging tax cuts.
Germany’s exports are also gaining momentum. In the first two months of 2017, their exports rose to €201.2 billion ($219.57 billion). It was driven by the demand for top quality German products such as cars and machinery. Data from the Federal Statistics Office showed that Germany’s exports to the U.S. jumped nine percent in January-February to €17.9 billion. Exports to China stood at €12.6 billion.
There were also forecasts of continued solid public finances with the national budget surplus seen falling only slightly to 19.2 billion euros, or 0.6% of gross domestic product, this year from EUR23.7 billion or 0.8% in 2016. For 2018, they forecast a surplus of EUR17.4 billion or 0.5% of GDP.
However, the German inflation-rate rose, this time from 1.9% in January to 2.2% in February 2017. This is the highest level for the last four or so years and beyond the point the ECB regards as “stable”.
Overall, Germany’s economy is faring quite well for the time being. According to the economics ministry, Germany’s economic upswing is “solid, significantly spurred by domestic economic forces”.