The German economy grew by +2.2% in 2017, the strongest pace since 2011. At +2.5%, calendar-adjusted (c.a.) growth was even higher. Domestic demand was a key driver of last year´s upswing, expanding by +2.2% in real terms. It is worth noting that investment in machinery and equipment grew considerably stronger than construction investment, despite the fact that order books in the construc¬tion sector are full. Real exports were up by +4.7%. As global trade expanded by about the same mag¬ni¬tude, this means that the German export sector was able to uphold its share in world trade. The very positive economic development in 2017 came along with an extraordinarily strong employment growth. The number of people in work grew by +1.5%, the strongest rate of expansion in the last ten years. However, on the back of demographic developments, labor market dynamics are expected to moderate in the years to come. All in all, we expect the German economy to remain on a clear upward trend in 2018. Signs of overheating and capacity constraints should only be an issue in a few branches such as construction. As of today no major risks to the growth outlook 2018 (+2.5% c.a.) are on the horizon.