{"id":507750,"date":"2022-07-18T02:20:00","date_gmt":"2022-07-18T02:20:00","guid":{"rendered":"https:\/\/www.publicfinanceinternational.org\/?p=507750"},"modified":"2023-09-04T08:01:00","modified_gmt":"2023-09-04T08:01:00","slug":"news-2019-07-german-economy-hit-hard-global-slowdown-imf-warns","status":"publish","type":"post","link":"https:\/\/www.publicfinanceinternational.org\/news\/2019\/07\/german-economy-hit-hard-global-slowdown-imf-warns\/","title":{"rendered":"German economy \u201chit hard\u201d by global slowdown, IMF warns"},"content":{"rendered":"\n

The IMF warns that Germany\u2019s economic growth is being held back by a global slowdown and the country needs to rebalance its economy. <\/p>\n\n\n\n

After re-assessing Germany\u2019s economic performance, IMF warned: \u201cThe export-dependent economy has been hit hard by the slowdown in global demand.\u201d<\/p>\n\n\n\n

The report<\/a> states: \u201cThe country\u2019s export dependence and financial openness make it particularly vulnerable to external shocks. Rising global protectionism, a more pronounced China slowdown, or a no-deal Brexit would hurt exports and investment.\u201d<\/p><\/blockquote>\n\n\n\n

Current global financial conditions could be the driving force behind sharp corrections in overvalued asset classes. The medium-term outlook doesn\u2019t look promising. Low productivity growth, aging demographics, and the energy transition are expected to slow down growth.<\/p>\n\n\n\n

After several years of GDP growth, which averaged over 2% annually, Germany\u2019s economy slowed down in the second half of 2018. GDP growth is expected to pick up by the end of 2019, with a projected growth of 0.7% and 1.7% in 2020.<\/p>\n\n\n\n

The IMF did note the strong economic performance, record low unemployment and good balance sheets over the past decade. However, the slow adaptation to technological changes and digitalization held Germany back. The energy transition is uncertain for business investments.<\/p>\n\n\n\n

Germany\u2019s account surplus after 2011 came from rising savings by firms along with fiscal consolidation. In the last two decades, unemployment fell, exports went up, but wage growth lagged and households spending power tightened.<\/p>\n\n\n\n

National income is in the form of profits held by firms owned by wealthy households, while lower incomes stalled.<\/p>\n\n\n\n

The report states: \u201cGermany\u2019s key economic challenge is to raise its long-term growth potential while rebalancing its economy\u201d<\/p>IMF Report<\/cite><\/blockquote>\n\n\n\n

Wage growth and lower taxes would help to boost the economy.<\/p>\n\n\n\n

Should you invest in Germany?<\/h2>\n\n\n\n

Some of the good reasons investors might consider investing in Europe<\/a> and German stocks is:<\/p>\n\n\n\n