Growth is moderate and expected to be slightly lower 2017. Household consumption will confirm its role as the primary contributor, and will be sustained by a steady rise in employment, which could reach 400,000 new jobs, especially in social services and health. Many of the jobs will be filled by people from the European Union and, to a smaller extent, by those from countries in crisis, as well as by more women and older people, compensating for the natural demographic deficit. Despite the probable return of modest inflation, real disposable incomes will grow as wages rise due to the shortage of skilled labor, a rise in the minimum wage and an increase in basic and child tax allowances. Public consumption will slow with a drop in the number of refugees taken in, but public investment in social housing and infrastructure will continue. The construction of private homes will continue to grow strongly. In contrast, business investment in equipment and buildings will pick up very gradually, despite the high rate of production capacity utilization, against a background of uncertainties over Brexit and sluggish exports (automobiles, chemicals, pharmaceuticals, optical instruments, machinery, electronics, electrical equipment, agricultural machines). These sectors face challenges from the convalescent emerging markets (23% of outlets excluding China), sluggish Chinese investment (6%) and European demand (60%), as well as uncertainties regarding North America (10%). Given the much stronger import growth connected with lively domestic demand and the stabilization of trade terms, trade's contribution to growth will at best be nil. In this environment, German businesses' payment behavior will remain generally good. The number of insolvencies will fall by 5.6% (after a drop of 5.4% in 2016), but the businesses at risk (and their liabilities) will be bigger. Some sectors will continue to be riskier than average: agriculture, slaughterhouses, electricity providers, metallurgy, publishing, construction, food and domestic appliances retail, and distance selling.

Despite slight fiscal loosening, against a background of tax relief for households, higher pension obligations, higher spending on transport, energy and early childhood services, which are not offset by the reduced debt service burden (zero interest rate on 10-year Bunds, negative on shorter maturities) and lower unemployment (4.3% in late 2016), the public balance will continue to show a small surplus. The maintenance of a significant primary surplus (i.e. excluding debt interest) and of a positive differential between growth and the average interest rate will result in another reduction in the debt burden. Although slightly lower, the current account balance will remain broadly in surplus thanks to a massive trade surplus (more than 8% of GDP). The balance of services will post a slight deficit (1% in 2015), with the tourism deficit exceeding the positive balance for financial and IT services, royalties and services to businesses. The income balance is expected to remain in surplus (0.8% of GDP), with income from investments abroad, which are increasing due to recurring current surpluses, exceeding remittances sent by émigrés and investors to the countries of origin.

Chancellor Angela Merkel (Christian Democrat, CDU), in power since 2005 and at the head of a grand coalition government since September 2013, with Sigmar Gabriel (Social Democrat, SPD) as Vice Chancellor and Minister of the Economy, will stand again at the next parliamentary elections in Autumn 2017. Criticized by those to her right represented by the Bavarian CSU and elements of the CDU, as well as by a large proportion of the population, for opening the borders to refugees (about 900,000 recorded in 2015), and faced with the refusal of other European countries to share the burden, the Chancellor tempered her position and in November 2015, concluded an agreement with Turkey on behalf of her European partners to stem the flow of migrants.

Despite immigration, the ageing population is putting pressure on the economically active population, while female participation in the labor market is hampered by the lack of childcare facilities. It is therefore essential to integrate the refugees in the labor market. The shortage of engineers and researchers is inhibiting innovation - a consequence of there being fewer students in higher education, many having been lured away by apprenticeships. The funding of the transition from 25% to 80% renewable energy by 2050, the phasing out of nuclear power by 2022 and modernization of coal-fired power stations are controversial measures, The electricity transmission system does not allow optimal exchanges between the north, where wind potential exists, and the south, where solar energy is produced, leading to loss of capacity. Lack of both public and private investment explains these difficulties.