Tests of German Resilience

October 2, 2012

Preview Citation

Format: Chicago

Fabian Bornhorst, and Ashoka Mody. Tests of German Resilience, (USA: International Monetary Fund, 2012) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

From its early post-war catch-up phase, Germany’s formidable export engine has been its consistent driver of growth. But Germany has almost equally consistently run current account surpluses. Exports have powered the dynamic phases and helped emerge from stagnation. Volatile external demand, in turn, has elevated German GDP growth volatility by advanced countries’ standards, keeping domestic consumption growth at surprisingly low levels. As a consequence, despite the size of its economy and important labor market reforms, Germany’s ability to act as global locomotive has been limited. With increasing competition in its traditional areas of manufacturing, a more domestically-driven growth dynamic, especially in the production and delivery of services, will be good for Germany and for the global economy. Absent such an effort, German growth will remain constrained, and Germany will play only a modest role in spurring growth elsewhere.

Subject: Balance of payments, Current account surpluses, Exports, International trade, Labor, Labor markets, Wages

Keywords: Asia and Pacific, Challenges arise, Current account, Current account surpluses, Economic performance, Economic recovery, Economic reforms, Europe, Export engine, Exports, Germany, Global, Growth performance, Growth record, IMF staff calculation, IMF staff estimate, Import share, Labor market, Labor markets, Producvity, Spillovers, Wage moderation, Wages, World War II Germany, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/239
Stock No:

WPIEA2012239
ISBN:

9781475511307
ISSN:

1018-5941

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