jens weidmann : germany - current economic policy debates keynote speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the joint imf - bbk conference " germany - current economic policy debates ", frankfurt am main, 18 january 2018. * * * 1. introduction ladies and gentlemen i welcome you all to the joint imf - bundesbank conference on current economic challenges. it is a pleasure to have you here. germany has posted four years of positive growth, record levels of employment, and the lowest unemployment rate since reunification. the casual observer might therefore be forgiven for thinking that germany ’ s economic challenges don ’ t look so pressing after all. but i know that managing director christine lagarde is very fond of john f kennedy ’ s saying that, " the best time to repair the roof is when the sun is shining ". and in the face of imminent demographic shifts in germany, prudence requires that we take this wisdom to heart. i am more than happy that christine will chair today ’ s concluding panel, guiding the discussion on a possible post - crisis agenda for germany and the euro area. right now, germany is still enjoying the calm of what is referred to as the " demographic pause ". but starting from 2020, the effects of an aging society will begin to kick in strongly. over the course of the next decade, the dependency ratio will rise from about one retiree per two employees to about one retiree per employee. without comprehensive policy action, this implies a significant slowdown of potential growth. and the repercussions will not be limited to germany. a marked reduction in the growth potential in the euro area ’ s biggest economy would be a burden for the overall state of the euro area economy. it could also translate into lower long - term interest rates in the monetary union. this in turn would not make matters easier for monetary policymakers. germany ’ s balanced budget, saving decisions or, more broadly, its current account surplus as a consequence, is largely driven by demographic considerations. but what makes sense from a domestic perspective might spell trouble for the euro area and the world at large, as it might detract from international demand. this is a worry voiced by some observers, the imf among them. are these worries valid? do germany ’ s policies need to change in order to accommodate international concerns? and are there policy options that could strengthen germany ’

march 2021. today ’ s monetary policy decisions were taken to ensure that inflation remains on a sustained path towards levels that are below, but close to, 2 % over the medium term. while there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year. the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment. moreover, underlying inflation continues to be muted. the weaker economic momentum is slowing the adjustment of inflation towards our aim. at the same time, supportive financing conditions, favourable labour market dynamics and rising wage growth continue to underpin the euro area expansion and gradually rising inflation pressures. today ’ s decisions will support the further build - up of domestic price pressures and headline inflation developments over the medium term. significant monetary policy stimulus will continue to be provided by our forward guidance on the key ecb interest rates, reinforced by the reinvestments of the sizeable stock of acquired assets and the new series of tltros. in any event, the governing council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards the governing council ’ s inflation aim in a 1 / 3 bis central bankers'speeches sustained manner. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp increased by 0. 2 %, quarter on quarter, in the fourth quarter of 2018, following growth of 0. 1 % in the third quarter. incoming data have continued to be weak, in particular in the manufacturing sector, reflecting the slowdown in external demand compounded by some country and sector - specific factors. the impact of these factors is turning out to be somewhat longerlasting, which suggests that the near - term growth outlook will be weaker than previously anticipated. looking ahead, the effect of these adverse factors is expected to unwind. the euro area expansion will continue to be supported by favourable financing conditions, further employment gains and rising wages, and the ongoing – albeit somewhat slower – expansion in global activity. this assessment is broadly reflected in the march 2019 ecb staff macroeconomic projections for the euro area. these projections foresee annual real gdp increasing by 1. 1 % in 2019, 1. 6 % in 2020 and 1. 5 %