This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Germany were reviewed by the Committee on 26 October 2020. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 24 November 2020.The Secretariat’s draft report was prepared for the Committee by Andrew Barker, Ze’ev Krill, Alexandra Effenberger, David Gierten, Maximilian Reisch and Verena Weber under the supervision of Mame Fatou Diagne. Statistical research assistance was provided by Corinne Chanteloup. Publication coordination was provided by Poeli Bojorquez. The Survey benefitted from contributions by Jean-Victor Alipour and Michaela Haderer.The previous Survey of Germany was issued in June 2018.Information about the latest as well as previous Surveys and more information about how Surveys are prepared is available at http://www.oecd.org/eco/surveys.

The German economy experienced a severe contraction in 2020 (Table 1) following a decade-long expansion. The initial COVID‑19 outbreak was brought under control with less stringent containment measures than in many countries thanks to high health sector capacity and early testing, tracing and isolation of cases. Resurgence of the virus in October led to renewed nationwide containment measures in November, including closure of hospitality and entertainment venues, while retail as well as schools remained open.

The German economy is experiencing a severe contraction in 2020 and the recovery will require sustained macroeconomic policy support. Germany managed the initial stages of the crisis well, as high health sector capacity and early testing, tracing and isolation of cases helped bring the initial virus outbreak under control with less stringent containment measures than in many neighbouring countries. A strong government response is protecting jobs and firms, using fiscal space from prudent budgeting before the crisis. The German government has taken a leadership role in establishing the EU Recovery and Resilience Facility, which will support the European recovery through EUR 750 billion in loans and grants to member states funded by new EU debt.

Digital transformation holds important potential for productivity, growth and well-being. The German government has made good progress in addressing some key issues, but much potential remains for unleashing the full benefits of digital transformation and data. Low penetration of high-speed broadband due to few fibre connections and an urban-rural divide in connection speeds, as well as below average mobile broadband data consumption and speeds weaken the foundations for digital transformation. Sluggish adoption of key ICT tools and activities, combined with low investment in knowledge-based capital and digital security concerns, further limits firms’ potential to innovate and create value with data. In particular SMEs require support to catch up. Addressing connectivity bottlenecks, incentivising investment and supporting business dynamism during the recovery by reducing administrative burden, facilitating access to financing, and accelerating progress towards digital government can boost technology diffusion and productivity growth. To empower everyone to thrive in digital environments, high demand for numeracy and literacy skills and shortages of ICT specialists, notably among women, need to be addressed. Making the most of digital transformation also requires a national digital transformation strategy and governance that ensures effective policy co‑ordination.