Tests of German Resilience

28 Pages Posted: 1 Nov 2012

See all articles by Fabian Bornhorst

Fabian Bornhorst

International Monetary Fund (IMF)

Ashoka Mody

International Monetary Fund (IMF) - Research Department

Date Written: October 2012


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.

Keywords: Economic growth, Economic recession, Economic recovery, Export competitiveness, Exports, Germany, Labor markets, Spillovers, economic performance, economic reforms, economic recovery, current account, producvity, labor market, spillovers, Germany

JEL Classification: E20, E65, N14, O52, P52

Suggested Citation

Bornhorst, Fabian and Mody, Ashoka, Tests of German Resilience (October 2012). IMF Working Paper No. 12/239, Available at SSRN: https://ssrn.com/abstract=2169780

Fabian Bornhorst (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ashoka Mody

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-9617 (Phone)
202-589-9617 (Fax)

HOME PAGE: http://www.amody.com

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