Front Matter Page
IMF Country Report No. 15/187
GERMANY
2015 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE ALTERNATE EXECUTIVE DIRECTOR FOR GERMANY
July 2015
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2015 Article IV consultation with Germany, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its July 10, 2015 consideration of the staff report that concluded the Article IV consultation with Germany.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on July 10, 2015 following discussions that ended on May 11, 2015 with the officials of Germany on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on June 22, 2015.
An Informational Annex prepared by the IMF staff.
A Staff Statement updating information on recent developments.
A Statement by the Alternate Executive Director for Germany.
The documents listed below have been or will be separately released:
Selected Issues
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2015 International Monetary Fund
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GERMANY
STAFF REPORT FOR THE 2015 ARTICLE IV CONSULTATION
June 22, 2015
Key Issues
Context:
Growth is benefiting from lower energy prices and euro depreciation, and the labor market is strong.
The external position remains substantially stronger than implied by medium-term fundamentals as the current account surplus reached another historical high.
The fiscal position is healthy, corporate and household balance sheets are sound.
Low interest rates are compounding chronically weak bank profitability and hurting life insurers’ solvency.
The population is aging fast despite record immigration, which will increasingly harm growth prospects after 2020.
Policy priorities: Further progress is urgently needed to raise potential growth while generating beneficial spillovers to the rest of the euro area and lowering the large current account surplus:
Step up investment addressing weaknesses in public infrastructure to strengthen potential output and domestic demand. To facilitate this process, put in place new institutions that enable better planning and coordination of public investment at the local level.
Enhance competition to foster a more productive services sector.
Reduce disincentives for women to work full time as a way to mitigate the adverse effects of an aging population on labor supply.
Expand the macroprudential toolkit to better address potential future excesses in the housing sector.
Ensure that life insurance companies maintain sufficient capital buffers to withstand a prolonged period of low interest rates.
Approved By
Mahmood Pradhan (EUR) and Tamim Bayoumi (SPR)
Discussions took place in Berlin, Bonn, and Frankfurt during April 29-May 11. The staff team comprised Enrica Detragiache (head), Joana Pereira and Jérôme Vandenbussche (all EUR), and Emine Boz (RES). The team was supported from headquarters by Mariza Arantes, Morgan Maneely, and Jean-Marc Natal (all EUR). Selim Elekdag (MCM) and Dirk Muir (RES) contributed to the analytical work.
Contents
RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK
A. The Economy Remains on an Uptrend
B. Outlook and Risks
EXTERNAL ASSESSMENT
POLICY DISCUSSIONS
A. Strengthening Both Growth Potential and Domestic Demand while Reducing External Imbalances
B. Public Investment
C. Structural Reforms: Services Sector and Energy
D. Countering Adverse Demographics: Female Labor Force Participation
E. Monetary and Financial Sector Policies
STAFF APPRAISAL
BOXES
1. Impact on Germany of Slower Growth in Emerging Markets
2. Potential Output in Germany
3. The Hartz Labor Market Reforms 10 Years on
FIGURES
1. Germany: Growth Outlook
2. Prices and Labor Market
3. Balance of Payments
4. Fiscal Developments and Outlook
5. Credit Conditions and Asset Prices
6. Recent Developments in the German Banking Sector
TABLES
1. Selected Economic Indicators, 2012-16
2. General Government Operations, 2012-20
3. Medium-Term Projections, 2012-20
4. Balance of Payments, 2012–20
5. International Investment Position, 2006-14
6. Core Financial Soundness Indicators for Banks
7. Additional Financial Soundness Indicators
APPENDICES
I. Risk Assessment Matrix
II. Authorities’ Response to Past IMF Policy Recommendations
III. Main Outstanding 2011 FSAP Update Recommendations
IV. Public Debt Sustainability Analysis
V. External Sector Report Country Page: Germany
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GERMANY
STAFF REPORT FOR THE 2015 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
June 22, 2015
Prepared By
European Department
Contents
FUND RELATIONS
STATISTICAL ISSUES
Front Matter Page
Press Release No.15/337
FOR IMMEDIATE RELEASE
July 15, 2015
International Monetary Fund
Washington, D.C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
