After slowing in the second quarter, growth has picked up in the third quarter on the back of strong domestic demand. The output gap is likely to be almost closed. Growth is projected to advance at near trend rates during 2008 and 2009. Following some near-term headwinds, unemployment may continue to edge down but at a much slower pace than in the recent past. The slower projected expansion largely reflects a diminishing contribution from net exports that is not fully compensated by stronger private consumption.

On 1 January, Germany took over the presidencies of the European Union and the G8. The last time our country had this dual-chair role was in 1999. Our basic goal this year is to address global challenges and to tap fully the opportunities of globalisation.

The interests and concerns of the EU and the G8 are by no means identical, but there are several areas where we can take the opportunity of our dual presidency to build useful synergies.

The picture of the German economy seems brighter than for quite some years. Should we feel confident?

“Today every invention is received with a cry of triumph which soon turns into a cry of fear.” Bertolt Brecht’s much quoted comment would probably capture the mood of today’s German venture capitalists, who, if recent spending trends are a sign, may only just be recovering from the fright of the new economy’s collapse in 2000-2001.

Your article on the German economy (“Germany: The case for reform”, OECD Observer No. 237, May 2003, also online) depicts only a small part of Germany’s problem. Foreign investment in Germany dropped in 2002 to only one-eighth of what it had been in 2001. Germany should implement reforms in bureaucracy and in the social state that could decrease costs for employers. The strict labour laws mandate high severance packages and a strict social benefits plan for the discharge of employees that do not take business requirements into consideration.

When the Berlin Wall came down in 1989, so too, it seemed, did the barriers to a new phase of Germany’s already formidable economic success. In the 1980s, growth of real GDP per capita in Germany and the other EU countries was roughly the same as in the United States, at around 2% per year. Sure enough, between 1990 and 1991, German growth steeply accelerated when incomes in the newly liberated East rapidly expanded, while growth elsewhere in the EU had sagged, having already peaked in 1988.

Renate Künaste, Germany's minister for consumer protection, food and agriculture, explains why the world's agri-food sector has to change some of its habits.

Germany is one of the world's great trading nations. Around a third of its GDP depends on exports. In a special to the OECD Observer, Germany's Minister of Economics and Technology, Werner Müller, explains why Germany wants broad-based trade talks to forge ahead. For Doha to succeed, industrialised countries may have to make some substantial concessions.