The International Monetary Fund lifted the German GDP forecast to 1.8% this year, 1.6% in 2018, from 1.6% and 1.5% respectively. The IMF welcomes the prospect of ongoing growth mid robust domestic demand and improved global conditions. At the same time, the IMF is calling on Germany to boost investment in infrastructure, child care and refugee provisions as well as to cut the tax burden on labor.
And while the IMF lifted its growth projections, it warned that the risks to the outlook are “broadly balanced in the short term, but predominantly negative in the longer term, as anti-globalization policies worldwide could harm growth prospects, while insufficient reform progress inside the euro area could rekindle stress”.
Against that background, the IMF urged Germany to focus on boosting potential growth while accelerating external rebalancing to help address the large current account surplus.