IMF Staff Country Reports

Germany: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Germany

July 18, 2024

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International Monetary Fund. European Dept. "Germany: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Germany", IMF Staff Country Reports 2024, 229 (2024), accessed November 22, 2024, https://doi.org/10.5089/9798400283260.002

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Summary

The 2024 Article IV Consultation highlights that the German economy has begun to recover from the energy-price shock. Gradual economic recovery is expected to continue this year. With wage growth now exceeding inflation, private consumption is expected to drive recovery during 2024. High interest rates have boosted bank profitability, but part of this increase is likely temporary. High interest rates have exposed vulnerabilities in banks’ financing of commercial real estate activity. Risks to growth are broadly balanced, with both positive and negative surprises to consumer and investor sentiment possible. Inflation is expected to slowly fall to around 2 percent as lower wholesale energy prices continue to pass through supply chains and to end-users. Fiscal policy is tight, putting the debt-to-gross domestic product ratio on a downward path, although public investment is also relatively low. In order to stabilize labor supply, the authorities should make it easier for women to work full time. This means expanding access to reliable child- and eldercare services and exploring ways to reduce the effective marginal tax rate on second earners in married couples.

Subject: Commercial banks, Expenditure, Financial institutions, Inflation, Labor, Labor markets, Prices, Public investment spending

Keywords: Article IV consultation discussion, Commercial banks, Currency of Germany, Energy-price shock, Global, Inflation, Labor markets, Public investment spending, State's ability, Supervisory authority

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