The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
Increases in core inflation owing to the VAT hike were smaller than expected, initially constituting a puzzle and leading to speculation about delayed increases or competitive pressures. Given Germany's large size and openness, spillover interactions appear to have increased over time. In the midst of a strong recovery, Germany is facing shortages of labor, the emigration of high-skilled labor, and a reduction in immigration. Germany's traditionally insider-dominated corporate governance system has undergone substantial reforms, leading to a pronounced strengthening of control by outsiders.