The German economy has improved markedly in recent years. The economy took a serious hit during the economic crisis. Because of the country’s strong export dependency, GDP declined by more than 5 per cent in 2009. However, the recovery was equally strong, resulting in a V-shaped recovery as pre-crisis real GDP was reached again in the second quarter of 2011. The German government expects real GDP to grow by 1.8% in 2015 and also in 2016, i.e. above its current potential rate of growth of 1.5%.
The labor market remained resilient during the economic and financial crisis and continued to grow stronger in 2014. A comprehensive set of labor and social reforms, termed “Agenda 2010,” introduced between 2003-2005 contributed to overcoming the structural weaknesses of the German welfare state and labor market, resulting in today’s strong employment growth and low unemployment.
As a result of the positive economic development, employment in Germany has continued to rise for the last nine consecutive years and reached an all-time high of 42.7 million in 2014, an increase of 371,000 from 2013. Particularly women and the elderly have benefitted from the positive trends in the labor market.