Germany’s economy posted fastest growth in six years in 2017, as GDP grew 2.2%. The World Bank estimates that Europe economy grew 2.4% in 2017, comparable to the 2.3% projection of the US.
With a boost of low interest rates, low unemployment, a weak euro, positive economic growth trends and rising wages propelling the economy, economists believe for Germany’s positive growth to continue. Some additional numbers from the report revealed a 5.2% increase in imports and 4.7% increase in exports. The overall budget surplus has reached 1.2% of GDP, and Germany’s increased investment spending is reflected through figures such as the 3.5% increase on plant and machinery.
For now, the political arrangement for a coalition in Germany has not stabilized. Analysts are evaluating the impact of these numbers on the final day of exploratory talks for formal negotiations with the SPD. Given that much of Merkel’s criticism is derived from accusations of economic apathy, with investors complaining about an over-restrictive tax system hindering much of Germany’s potential growth. The public sector as a whole posted a record surplus of 38.4 billion euros, indicating the ability for the government to trim the tax burden and increase spending. Meanwhile, the SPD continues to argue for increased taxing of high earners in Germany. Whether this data encourages Merkel to make additional concessions to an agreement with the SPD will remain to be seen. The SPD publicly remains skeptical to Merkel’s proposal for a coalition, but key leaders such as Martin Schulz are attempting to sway delegates of their own party towards agreement.
Keith Knutsson of Integrale Advisors commented, “I have demonstrated my faith in Germany’s economic growth for years now – despite the current political limbo there is much potential left in the market. “