According to the German Council of Economic Experts, Germany’s GDP growth will come in at 1.9% in 2016 and will slow down to 1.3% in 2017. The slowdown is explained by calendar effects: there will be fewer working days in the country next year.
In their report, the economists highlight that the pace of the GDP growth is exceeding an increase in production capacity, which turns out to be under even greater pressure.
In their opinion, the main driver of economic growth is a large increase in consumer and budget spending, as well as a boom in the construction sector.
Germany's robust labor market is due to growing consumer spending. It is expected that the number of people in employment in the country will increase by 500,000 in 2016, hitting a record of 43.6 million.
As for the economic situation in the euro area, it has less prospects in experts’ view; however, the overall situation is considered positive. This year the eurozone GDP will grow by 1.6% and will advance by 1.4% in 2017. However, some risks including the ECB’s liberal monetary policy and other unresolved structural issues persist.
These factors led to fading willingness to reform in Europe and some EU member states lacking necessary budget discipline.
