Germany (Real GDP, yoy %)
201920202021
Consensus (median)1.91.571.4
High estimate3.24.11.4
Low estimate0.90.81.4
Standard Deviation0.380.750
Count of Estimates76221
[Positive]

Germany is in a boom phase, with growth rate ~2.5% (the highest since 2011, when growth rate was 3.7% on the back of post-crisis recovery). This growth is fueled by booming real estate market (due to low interest rates), global growth, increasing investments (due to capacity utilization is at the highs) and increasing domestic demand (due to increasing wages and decreasing unemployment which is at the lows). Fiscal policy is rather stable as well: moderate stimulus with budget balance in surplus. I assume that current growth of Germany is rather stable in near-term. However, in 1-2 years there is a risk that real estate market, one of the catalyst, would be overheated, thus, slowing down of growth is possible.

[Positive]

In spite of the current tense relations within the EU, Germany is likely to remain the most powerful economic and political player in the EU due to the structural elements supporting German power within the bloc and most importantly its dominant economy. In my view Germany will continue to demonstrate huge trade surpluses, reflecting the competitiveness of its manufacturing sector and comparably low levels of domestic consumption and investment. This will continue to generate large domestic savings that are generally investing to another countries, providing a a strong primary income surplus. I expect the current-account surplus to remain solid, decreasing consistently to just above 6% of GDP by 2022. As well as I expect that average annual inflation will be at the level of 1.7% in 2018-2022.

[Neutral]

The main feature of German economy, as I think, is very high level of current accounts surplus (around 7-9% of GDP, this is one of the highest level within developed peers) This is one of the keys potential driver for economic growth. High surplus demonstrates that Germans and companies of the country still prefer to save rather than invest. The government should offer Germans some incentives to invest. Why not to increase a little bit of inflation (e.g. steady increase in wages, more government spending, etc.). I am sure this is like low-hanging fruits.

[Positive]

In most cases (I mean when reading articles written by analysts) the outlook for German economy is promising. They are assumed to implement the policy of wages increase, infrastructure projects. These would boost an inflation (what we know is not bad but indeed positive when it is moderate). The political elite I think must reduce the power of sanction against Russia, I calculated that Germany may easy earn min. 25-30 bn euro. Of course this lies on political grounds and indeterminable in mid-term future.

[Negative]

I guess that aging society of German is the main challenge for its economy. In the logic the government should accelerate special education for immigrants in order to promote solid economic growth. But of course this is very sensible thing which may be in the agenda in minimum 5 years.