Finance Abbas Mahamat Tolli and hosted by UNHCR Representative Ana Liria-Franch, de Rato made the 500-mile (800-km) journey from the capital of N’Djamena to the camp, which is only 10 miles (16 km) from the frontier with Sudan. At Oure Cassoni, he was greeted by refugeerepresentatives as well as representatives from UN agencies and nongovernmental organizations—International Rescue Committee, ACTED (Aid for Technical Cooperation and Development), and Action contre la faim. He presented a donation from the IMF’s Civic Program, telling the humanitarian workers at the
support was provided by Messrs. Andrle and Jakab (both RES), and Mr. Xie (EUR). Mr. Meyer (OED) participated in the discussions. The mission met with Parliamentary State Secretary Meister, Bundesbank President Weidmann, officials from the Federal Chancellor’s office, the Finance, Economic Affairs, Labor, and Environment Ministries, the Bundesbank, the Federal Office for Migration and Refugees, representatives from the social partners, the banking and insurance sectors, think tanks, and academics.
CONTEXT: THE ECONOMY IN A POSITIVE MOMENTUM
was supported from headquarters by Ms. Ordonez-Baric and Mr. Musayev (both EUR). Mr. Merk (OED) participated in the discussions. The mission met with State Secretary of the Federal Ministry of Finance Schmidt, Bundesbank President Weidmann, officials from the Federal Chancellor’s office, the Finance, Economic Affairs, Labor, and Environment Ministries, the Bundesbank, the Federal Office for Migration and Refugees, representatives from the social partners, the banking and insurance sectors, think tanks, and academics.
Chancellor’s office, the Finance, Economic Affairs, Interior, Labor, and Environment Ministries, the Bundesbank, the ECB (SSM), BaFin, the Federal Office for Migration and Refugees, representatives from the automotive industry, social partners, banks, think tanks, and academics.
OUTLOOK AND RISKS
A. Addressing External Imbalances by Restoring Household Purchasing Power
B. Fiscal Policy to Boost Potential Growth and Support Rebalancing
C. Boosting Productivity Growth and Private Investment
D. Shoring up Financial
International Monetary Fund. External Relations Dept.
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This 2017 Article IV Consultation highlights that Germany’s growth momentum has remained solid, underpinned by robust domestic demand. In 2016, strong employment growth continued to support private consumption, while public consumption and investment in construction accelerated further. Following a soft patch for most of the year, exports and investments in equipment have rebounded in the most recent quarters. Real GDP is expected to grow by 1.8 percent in 2017 and 1.6 percent in 2018, increasing the already positive output gap and pushing up core inflation. Over the medium term, population aging and slow progress on structural reforms is expected to weigh on growth.
Germany’s economic performance has been strong for the past decade, but external factors and structural challenges are now weighing on growth. The export-dependent economy has been hit by the recent slowdown in global demand, while medium-term growth is expected to fall due to low productivity growth and adverse demographics. External imbalances remain large, partly reflecting rising top income inequality, macro-financial vulnerabilities are rising, and the financial sector continues to suffer from weak profitability. Still, fundamentals are sound, with public and private balance sheets remaining healthy, and the unemployment rate at record lows. Inflation is subdued, but wage growth is continuing to pick up, reflecting the strength of the labor market and increasingly binding capacity constraints.
The Germany economy has performed very well in recent years, supported by prudent economic management and past structural reforms. Growth is robust, employment is rising, and the unemployment rate has fallen to levels not seen in decades. Inflation remains low but wage growth is picking up, reflecting the strength of the labor market. Looking beyond these positive cyclical developments, unfavorable demographics will soon weigh on potential growth and put pressure on public finances. Having already accumulated sizable buffers through savings, Germany should now prioritize domestic investment in physical and human capital to prepare for the future. The new government's coalition agreement contains several welcome measures in this direction, but more forceful actions to boost labor supply and increase labor productivity would help stimulate domestic investment and reduce Germany’s large current account surplus.