According to Patrick’s proprietary model, Germany will experience quite modest economic growth between 2010 and 2050. Keep in mind that the underlying pillar of this model is population growth, and Germany’s population is expected to shrink by 12% during that time period. Although Germany has historically been the economic engine within the Eurozone, that dominance will wane as the years pass.
Political volatility will not be a problem for Germany for the foreseeable future. Social unrest and protests are highly correlated with “youth bulges” or baby booms. Germany has the opposite. There are very few young people (as a percentage of the total population) and a lot of seniors. Retired people don’t protest. So while the economic picture looks fairly bleak, the political landscape will evolve in a civilized way.
Because of the small proportion of young people in the country, Germany’s median age is extremely high, topped only be Italy and Japan, and a healthy life expectancy as well. Their export-driven economy will allow the country to find modest growth despite its domestic consumer spending. Germany also benefits from the Euro which attempts to combine countries with vastly different productivity levels. The southern Mediterranean countries are far less productive while Germany is the most productive. As a result, the common currency acts as an indirect subsidy for all German-produced goods and services.
Germany has a massive “youth deficit” and a growing number of seniors to support. Through entitlement programs, that age profile will put significant strain on public resources. Like all European nations, Germany will have to embrace entitlement reform over the years ahead. The percentage of seniors in the population will peak between 2025 and 2030 and the economic strain will subside somewhat after that point, but only modestly. Unfortunately, the future for Germany has some challenges to contend with.
Patrick is an award-winning author and keynote speaker who can speak about demographic trends affecting Germany at conferences and business events in Berlin, Munich, Frankfurt or other German destinations.
DISCLAIMER: Projected results are NOT guaranteed. The forecasts for Germany above were calculated based on projected population data obtained from the World Bank website. The economic forecast used this demographic data along with adjusters for net exports, relative age distribution and per capita income projections. The political volatility forecast used the same demographic data along with adjusters for youth population percentage, projected economic growth and public government debt level. Please see the model methodology for more details.
Patrick Schwerdtfeger maintains a video blog entitled “Strategic Business Insights” and adds new videos on a regular basis. Some of the videos are ‘macro’ covering topics like global business trends and geopolitical dynamics. Others are ‘micro’ covering communication skills and your mental mindset. Access them here:
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