Overall economic climate

Overall economic situation

The economy in the eurozone displayed strength in the reporting year. Virtually all countries were on a growth course, which led to a reduction in political risks. According to estimates provided by FERI Investment Research, economic growth for the eurozone was 2.3% in 2017 (2016: 1.5%).


German economy displaying robust growth

Economic activity in Germany gained both dynamism and breadth in the last financial year and remains on a growth course. Alongside several years of stable domestic demand, in its autumn outlook the German government noted the upturn in the eurozone and the recovery in the global economy, which has injected new life into exports, as the reasons behind this. According to calculations performed by FERI Investment Research, inflation-adjusted gross domestic product (GDP) in Germany increased considerably by 2.2% in 2017.

Consumer sentiment unchanged among German citizens

Private consumption, which benefited from the positive situation in the labour market, remained the key growth driver in the reporting year. These framework conditions were expressed in highly positive consumer confidence, as underlined by the Consumer Sentiment Index of the German Consumer Research Association (GfK), which came in at 10.7 points in November 2017, an increase from just 9.7 points in November 2016.


The mood at German companies is also excellent. In November 2017 the ifo business climate index increased to a new record of 117.5 points – having risen from 110.1 points in January 2017. In December 2017 it then slipped slightly to 117.2 points. However, the companies actually rate their current business situation as better than in the previous month.


Excellent prospects in the labour market

The upward trend in the German labour market continued. According to data published by Germany's Federal Employment Agency, the annual average number of registered unemployed persons fell by 158,000 year-on-year to approximately 2.53 million in 2017. This corresponds to an unemployment rate of 5.7% (2016: 6.1%), which is the lowest level in 25 years.


In particular, the prospects for university graduates remained excellent in the German labour market. According to the latest data from Germany's Federal Employment Agency, the unemployment rate among academics remains at a very low level of just 2.3%.


The economic situation of private households was markedly positive in 2017. According to the German Federal Statistical Office, gross wages and salaries increased by 4.4%, while the disposable income of private households increased by 3.9%. The savings rate in Germany remained unchanged in the past financial year, reaching 9.7% in 2017.