The German center may not hold

German Chancellor Angela Merkel announces her bid for a fourth term
Nov. 20, 2016: German Chancellor Angela Merkel announces her bid for a fourth term (source: dpa)

Since the late 1940s, Germany has been both a source of uncertainty in Europe and the cornerstone of efforts to build stability and prosperity on the continent. In 2016 this basic ambiguity continues, but with a more positive tilt than is apparent from the headlines.

  • Economic growth is poised to accelerate as sound public finances give the government latitude to continue structural reforms.
  • Despite the immigrant influx, the jobless rate has fallen to a 25-year low (5.8 percent) and the workforce is forecast to reach a record 44.3 million in 2017.
  • People’s satisfaction with their lives is rising, at least in western Germany.
  • Demographic decline has begun to slow, although a rising birth rate (the highest in 33 years) and more immigration have not yet reversed the trend.
  • Political extremism has not destabilized the party system. The Left Party is relatively stable at 10 percent support, and its entrance into two state governments will tend to strengthen its realist wing. The right-wing Alternative for Germany (AfD) has begun to slip below 13 percent in the polls, with one major survey showing 9 percent.
  • While Germany is still a magnet for refugees, the influx has slowed even without an enhanced program to redistribute them among other European Union members. But this improvement hinges on a politically fragile deal with Turkey, which awaits promised financial aid from the EU.

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