Germany: Recovering at last

A brisk economic recovery is under way in Germany, ending a period of subdued and uneven growth that persisted for a decade despite a strong performance from exports. In previous business cycles, export growth typically led to general economic recovery within six to nine months. But export industries had to adjust after facing competitiveness problems in the early 1990s, and the same adjustments that
helped exporters—wage moderation and a substantial reduction in the workforce—held down domestic demand. That meant the economy was unable to absorb all those workers who lost jobs in export industries as well as in the construction sector, which had a long decline.
Picking up Germany’s GDP and employment are growing again, but at a subdued pace.

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