MNI BRIEF: Demographic Change Risks German GDP Uptick Plans

German GDP could grow at 1% per year on average by the 2030s thanks to the CDU-SPD coalition government's “ambitious but realistic” spending and reform plans, according to a new report by KfW, the state investment bank, but failure to address unfavourable demographic trends would see growth of just 0.3%.

“The return to an average annual growth rate of 1% per capita, as formulated as a minimum requirement in the black-red coalition agreement, is an ambitious but realistic goal,” the report concludes.

“If we continue on the same path over the next decade and a half, we can only expect minimal growth," the report notes. Even with a moderate recovery in investment activity and productivity, Germany's growth potential is likely to remain at an average of only 0.3% per year due to unfavourable demographic trends. Germany must therefore take urgent and coordinated action if it wants to achieve significantly higher growth in the future, thereby securing its prosperity, the report adds.