Germany: Staff Report for the 2002 Article IV Consultation
IMF Staff Country Reports, October 31, 2002
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- Germany: Staff Report for the 2002 Article IV Consultation
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Bibliographic details
- Published: October 31, 2002
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451810363.002
Executive summary
- Germany’s economy is poised for a fragile recovery after having barely grown since mid-2000.
- The earlier price shocks and interest rate hikes that contributed to the current slowdown have now unwound.
- Real GDP growth in 2002 is estimated at about 0.5 percent.
- The general government deficit is set to exceed 3 percent of GDP.
- Factors that may impede a strong recovery: sluggish global growth, stock market declines, weak credit growth, and the withdrawal implied by planned fiscal consolidation.
Near-term economic outlook and projections
- Real GDP growth in 2002: about 0.5 percent.
- General government deficit: set to exceed 3 percent of GDP.
- Recent disinflation: earlier price shocks and interest rate hikes have unwound (implying lower inflationary pressure).
Key risks and headwinds
- Sluggish global growth could damp external demand and the recovery.
- Stock market declines may reduce wealth and investment.
- Weak credit growth could limit financing for firms and households, slowing activity.
- Planned fiscal consolidation may involve a withdrawal of demand, constraining recovery prospects.
Policy implications (inferred from report focus)
- Monitor and address financial conditions to support credit growth and market confidence.
- Weigh the timing and pace of fiscal consolidation against the fragility of the recovery to avoid exacerbating the downturn.
- Support measures to stabilize demand while ensuring medium-term fiscal sustainability.