International Monetary Fund European department head Poul Thomsen called on Germany to increase public spending to revive the economy and address long-term structural challenges, before it is too late, Bloomberg News reported.
Germany, which does not operate under a high debt burden, could invest in infrastructure and digitization projects, while encouraging more women to join the workforce, Thomsen said in an interview.
German Finance Minister Olaf Scholz said Sept. 10 that the country would stick to a balanced budget for 2020 but would be willing to spend "billions" to fend off an economic crisis at home or in Europe.
Meanwhile, German Chancellor Angela Merkel said Germany can afford to fund projects and has investment opportunities lined up.
Europe's largest economy contracted 0.1% in the second quarter, with economic indicators hinting at another expected contraction in the third quarter, which would mean a technical recession for the nation.
As fears of a downturn mounted, reports emerged in August that the government was preparing a stimulus plan and proposed cutting corporate tax.
