German economy in good shape

Abstract

The German economy is in the midst of a robust economic cycle: the number of employed persons has reached historic highs and is still increasing powerfully; private household income is on the rise; and the public coffers are overflowing. Inflation is rising only gradually, partly because capacities are not overburdened. The mood is bright among consumers and firms alike, with economic development distributed across the board: the service sector is benefiting from consumers' more liberal spending habits, while industry is profiting from the robust exports. Yet uncertainties remain high- and this is also why companies continue to hold back on expanding their domestic capital stock. The Brexit negotiations-which include the future of trade relations-are also fraught with considerable uncertainty; as well, foreign trade could also suffer if the U.S. government implements stronger protectionist measures. No significant acceleration in investment-as would be expected given the current economic conditions-is apparent.