Germany flag Germany: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Germany is the top economic power in Europe and the fourth globally. After experiencing a historic recession in 2020 due to the outbreak of the COVID-19 pandemic, the country grew an estimated 3.1% in 2021 (IMF) despite the fact that the manufacturing and construction sector have been struggling with supply shortages. Recoveries in private consumption and exports are expected to drive growth in 2022, with a projected GDP growth of 4.6% (IMF). Investment shall also be supported by the implementation of the European Recovery and Resilience Plan. In 2023, GDP is expected to grow by 1.7%, assuming a normalisation of supply and demand dynamics, though much will depend on the global COVID-19 situation.

The unprecedented measures taken to fight the pandemic and stabilise the economy – focused on subsidies to companies, prolongation of the short-time work scheme and increased healthcare spending for vaccination and testing - drove an increase in Germany’s budget deficit, which reached an estimated 5.7% in 2021. The phasing out of measures is set to noticeably reduce the deficit thereafter, to 1.6% in 2022 and 0.3% in 2023 (IMF, although the European Commission forecast is less optimistic, at 2% and 0.5%, respectively). Similarly, the debt-to-GDP ratio grew to reach 72.5% in 2021. However, the country is expected to return on a debt reduction path this year (69.8%) and in 2023 (68% - IMF). Consumer price inflation was estimated at 2.9% in 2021, mostly due to rising commodity and energy prices. In 2022, inflation is projected to ease to 1.5%, before slowing further next year (1.3%). Germany’s current account balance returned to the pre-pandemic level in 2021 and should increase in the upcoming years thanks to the rising demand from the country’s main business partners.

Unemployment was estimated at 3.7% in 2021 (IMF). Hiring expectations and the percentage of businesses reporting labour shortages returned close to or higher than the pre-crisis level, setting the stage for a resumption of employment and wage growth. The IMF forecasts a gradual decrease of unemployment to 3.6% this year and 3.5% in 2023. With a GDP per capita (PPP) of USD 54,263, Germany is among the wealthiest countries in the world (World Bank). Nevertheless, according to data by Destatis, around 17.4% of the country's population is at risk of poverty or social exclusion (latest data available).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 3,888.763,843.34e4,230.174,557.354,774.08
GDP (Constant Prices, Annual % Change) 1.1-4.6e2.73.82.5
GDP per Capita (USD) 46,80046,216e50,78854,65357,209
General Government Balance (in % of GDP) 1.3-3.1e-5.7-1.6-0.3
General Government Gross Debt (in % of GDP) 59.269.1e72.569.868.0
Inflation Rate (%) 1.40.4e3.25.52.9
Unemployment Rate (% of the Labour Force) 3.23.8e3.73.63.5
Current Account (billions USD) 289.56266.97287.57316.69343.98
Current Account (in % of GDP) 7.46.96.86.97.2

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 GBP 1.271.141.131.111.12

Source: World Bank, 2015

 

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Latest Update: September 2022

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