Knowledge@Wharton analyzes the first months of angela Merkels work:

"During her first few months in office, German Chancellor Angela Merkel has attained the kind of approval rating that politicians the world over dream about, largely due to the way she has handled herself on international matters in visits to Washington, Moscow and Brussels. According to a poll by Der Spiegel, the newsweekly, 85% of Germans like the way Merkel is doing her job. But ask any politician -- George Bush, Tony Blair, Jacques Chirac -- about the likelihood of retaining such a lofty number and they'll tell you that what goes up can just as readily come down, especially when tough domestic issues have to be addressed.

Mauro Guillén, a professor of international management at Wharton, says Germany has something of a schizophrenic economy. Its manufacturing base remains a powerhouse and highly competitive globally, but its service economy is a relative weakling.

Germany turns out some of the best products in the world, such as machine tools, automobiles, precision instruments and specialty chemicals. And Germany is one of only two large, developed economies (the other is Japan) that enjoy huge trade surpluses. "The manufacturing sector in Germany has been very innovative, and Germany has wonderful research and development systems," Guillén says. "The Americans and the British wish they had competitive manufacturing sectors like the Germans. Unfortunately, the global economy is a service economy. Germany in this area is not very competitive."

The article cites several sources all saying that Germany's economic situation is better than it looks. However there are hardly signs for deeper reform something that Germany needs to undertake in the next decade in order to stay economy number 3 in the world - I personally doubt much change will happen.