Economic Outlook

Expansion remains on track

Kiel Institute Economic Outlook Germany, Nr. 20 (2016 | Q2)

The economic upswing in Germany is set to con­tinue. GDP is likely to grow 1.9 percent this year and 2.1 percent next year. Strong domestic drivers remain the dominant factors. The significantly lower number of refugees arriving since the start of the year will be mainly reflected in a somewhat lower fiscal impulse during the forecast period. The labor market situation will improve further against the backdrop of a buoyant economy and an ongoing employment-friendly trend in wages. Consumers will see their purchasing power supported this year by the down­ward pressure of oil prices on inflation. Although public sector budgets are likely to close both years in positive territory, the surpluses are due to economic conditions rather than fiscal consolida­tion efforts.