Growth Overview

Germany is an advanced industrial economy with strong manufacturing, exports, and a large services sector. Growth is constrained by energy costs, demographics, and regulatory complexity.

Constraints

• Aging population and shrinking workforce.
• Energy transition and exposure to imported fuels.
• Complex regulation slowing investment.

Levers for Higher Growth

1. Lower structural energy costs via accelerated renewables, grid upgrades, and long-term contracts.
2. Automation and productivity gains in manufacturing and tradable services.
3. Targeted migration policy focused on high-skill and medium-skill gaps.
4. Regulatory simplification for capex-heavy projects.

Scenario Intuition

Under the baseline, Germany continues to grow slowly as demographics drag on labor supply and high energy prices cap industrial output.

With a credible reform package that lowers energy costs, speeds permitting, and attracts skilled workers, Germany plausibly adds ~0.5–0.7 percentage points to annual real GDP growth over a decade.