A sharper slowdown of activity in emerging markets and renewed weakness of activity
in the euro area could weaken exports more strongly than projected, damp investment, and
spill over to consumer confidence.
The German economy depends more on world trade than
most because of the high weight of exports in GDP and the relatively high share of
investment goods exported to emerging economies.
Other potential shocks could result from
a further increase in immigration or turbulence in the euro area . On the other hand,
steps to strengthen confidence in the euro area would boost the attractiveness of Germany
as a location to invest. Adopting policies to deal with domestic long-term challenges, notably
to deal with population ageing, could also boost investment in the near term.