Business · Economy · 2 hrs ago
IW sees Germany’s growth potential rising from 2030
The German Economic Institute (IW) expects Germany’s growth potential to increase from 2030.
It estimates potential growth at 0.3% a year through 2030, rising to 0.7% a year in 2030–40 and 1% in the second half of that decade.
The institute says digitalization and artificial intelligence could boost productivity.
Greater use of capital, including investment in AI, energy infrastructure and climate protection, is expected to add an average of half a percentage point to growth.
That depends on Germany overcoming its long-running investment weakness, and the government plans to hold an international investor summit in Berlin next week.
At the same time, demographic change is expected to reduce the workforce: the number of people of working age is projected to fall by 4.3 million, or 7.7%, from 2025 to 50.8 million in 2040.
Germany’s economic growth potential is forecast to rise to 0.7% a year between 2030 and 2040, according to a study by the IW institute.
That would compare with 0.3% a year in the decade ending in 2030.
The study expects growth potential to reach 1% a year in the second half of the 2030s.
Digitalisation, artificial intelligence and greater investment are expected to support growth.
An ageing population is expected to reduce the number of people of working age and weigh on growth.
- Who
- The Institute of the German Economy (IW), an employer-oriented research institute.
- What
- The IW forecasts that Germany’s growth potential will rise from 2030.
- When
- The forecast covers 2030 to 2040, with growth potential expected to increase further in the second half of the 2030s.
- Where
- Germany.
- Why
- Digitalisation, artificial intelligence and greater use of capital are expected to boost productivity and growth, while demographic change is expected to reduce the workforce.
This story does not have two clearly opposing sides.
Germany had 4.3 million more people of working age than the 50.8 million projected for 2040, according to the study.
The current decade is expected to end with growth potential of 0.3% a year.
Growth potential is forecast to average 0.7% a year.
Growth potential is forecast to rise to 1% a year.
The number of people of working age is projected to be 50.8 million.
- Growth potential, 2030–2040
- 0.7% a year
- Growth potential, decade to 2030
- 0.3% a year
- Growth potential, second half of the 2030s
- 1% a year
- Working-age population, 2040
- 50.8 million
- Change in working-age population, 2025–2040
- Down 7.7%, or 4.3 million people
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What people are saying
This presupposes that the investment weakness that has persisted for years in Germany is overcome.