Analysis of the Declining Trend in Germany’s Potential Growth Performance
Germany’s relatively weak growth performance since the mid-1990s in comparison with other countries has given rise to policy and academic debate in recent years focusing on the possible reasons for this decline in economic dynamism. Figure 17 outlines the decline in real economic growth in Germany since the mid- 1980s. A substantial growth gap has also opened up with respect to the euro area and OECD countries since the middle of the 1990s. This ongoing decline in real economic growth in Germany cannot be explained by a cyclically determined under-utilisation of production capacities alone. On the contrary, adjusting the underlying growth data for business cycle effects reveals a declining trend in potential growth for the German economy in recent decades. This development is illustrated in Figure 18.
KeywordsTotal Factor Productivity Labour Force Participation Fiscal Policy Euro Area European Central Bank
Unable to display preview. Download preview PDF.