• Germany's news in English
 
app_header_v3

Think tanks scale back growth forecast

The Local · 18 Apr 2013, 12:20

Published: 18 Apr 2013 12:20 GMT+02:00

The four institutes – Ifo in Munich, IfW in Kiel, IW in Halle and RWI in Essen – predicted that German gross domestic product (GDP) would expand by 0.8 percent in 2013, instead of by an earlier forecast of 1.0 percent, and then grow by 1.9 percent in 2014.

"An upwards tendency re-emerged in the German economy in spring 2013. The situation in the financial markets has eased thanks to subsiding uncertainty regarding the future of the European Monetary Union. The headwind in the world economy has also tailed off somewhat," the think-tanks said in their latest spring forecast.

"The institutes expect gross domestic product in Germany to increase by 0.8 percent this year and by 1.9 percent next year," the report said.

Germany has managed to avoid the recession that the eurozone's long-running sovereign debt crisis has pushed many countries into. But economic growth has nevertheless slowed to just 0.7 percent in 2012 from 3.0 percent the previous year.

 

Earlier on Thursday, the international credit rating agency Moody's said it expected German growth to slow to 0.4 percent in 2013 as exports feel the pinch of the downturn elsewhere in the euro area.

But Germany could clock up growth of around 1.5 percent in 2014, the agency predicted. "In spring 2013 the world economy revived somewhat. The expectations of companies and consumers have improved since autumn and both industrial production and world trade have picked up in recent months," the institutes said in their report.

"This is due in no small measure to the perception that there is a lower risk of the euro area breaking up after ECB (European Central Bank) intervention. The banking and financial crisis in Cyprus does not seem to have fundamentally changed this perception," it said.

The institutes predicted that the economy would pick up over the course of this year.

"The conditions in the financial markets have improved significantly since last autumn. Tensions in the euro area, which mounted in the first six months of 2012 after a renewed intensification of the government debt crisis, eased considerably."

Stock markets have risen sharply since mid-2012 and recently hit long-term highs in several countries.

"Conditions are ripe for a sharp increase in economic output," the institutes said, pointing to low interest rates and the competitiveness of German companies.

"In addition, the labour market in Germany remains robust. There are virtually no traces of the recent economic downturn in this market," the report said.

Indeed, the downward trend in unemployment was set to continue, with the annual average jobless total projected to slip to 2.872 million this year and 2.717 million in 2014 from 2.897 million in 2012.

Story continues below…

That would bring the jobless rate down to 6.7 percent in 2013 and 6.4 percent in 2014 from 6.8 percent last year.

Germany's economic resilience would also have a positive effect on public finances, with the budget expected to be "almost balanced this year" after a slight surplus of 0.2 percent last year, the institutes predicted.

And next year, "the public budget situation will continue to improve and the state should post a surplus of 0.5 percent related to gross domestic product, mainly thanks to more favourable economic conditions," the institutes said.

"Uncertainty hangs over this forecast due to the parliamentary elections scheduled to take place in September 2013," they nonetheless added.

AFP/jcw

The Local (news@thelocal.de)

Your comments about this article

Today's headlines
Germany mulls pullout from Turkish airbase: report
A German Tornado jet at the Incirlik base in Turkey. Photo: Bundeswehr/DPA.

Germany's military is preparing to pull out from a Turkish airbase as a row between the two NATO partners escalates, Der Spiegel magazine reported on Thursday.

German man arrested over Bali meth lab
Bali. Photo: DPA

A German man has been arrested on Indonesia's Bali island for allegedly making crystal methamphetamine in a secret lab, officials said Thursday, with authorities seizing bags of powders and bottles used to produce the drug.

Giant 2-metre catfish attacks woman in Bavarian lake
A wels catfish. Photo: DPA

When a young woman went for a swim in an idyllic south Bavarian region, she got more than she bargained for.

Mayor fires refugee project intern for wearing headscarf
File photo: DPA.

A Palestinian who was hired to work as an intern on a refugee project was fired by a town hall this week because she wouldn't take off her headscarf.

President who pioneered Moscow ties dies aged 97
Former Cold War President of West Germany Walter Scheel. Photo: DPA.

Former West German president Walter Scheel, who helped pave the way for his country's rapprochement with the communist East, has died aged 97, his party's spokesman said on Wednesday.

Former East to lag behind West for years to come: study
Poverty in eastern Germany. File photo: DPA

Eastern Germany remains economically anaemic with little prospect of catching up with the rest of the country by 2030, a study published on Wednesday said.

Turkey's spy network in Germany 'thicker than Stasi's'
Photo: DPA.

Turkey has around 6,000 informants working in Germany, which experts say means they're each monitoring more people than the Stasi did in West Germany during the Cold War.

Germany's first 'intelligent' bridge to open in Nuremberg
File photo: DPA

An €11 million bridge, which is nearing completion in northern Bavaria, is set to include technology never seen before on the German Autobahn.

Stockpile food in case of attack, Germany tells citizens
Photo: DPA

Germany on Wednesday urged its population to stockpile food and water in case of terrorist or cyber attacks, as it adopted its first civil defence strategy since the end of the Cold War.

Ten injured after freight train crashes into bus in Osnabrück
The crash site in Osnabrück. Photo: DPA

A freight train crashed into a bus in Osnabrück on Wednesday morning, leaving several people badly injured, local media report.

Sponsored Article
Why you should attend an international job fair
Gallery
Germany's 17 Olympic gold medals in pictures
Sponsored Article
Why expats choose international health insurance
Culture
7 American habits that make Germans very, very uncomfortable
Rhineland
Story of a fugitive cow who outwitted police for weeks before capture
Sponsored Article
Why you should attend an international job fair
Culture
Eleven famous Germans with surnames that'll make your sides split
Sponsored Article
Life in Jordan: 'Undiscovered treasure'
Lifestyle
The best ways to get a visa as an American in Germany
14 facts you never knew about the Brandenburg Gate
Society
Ten times Germans proved they really, really love beer
Sponsored Article
Why Jordan is the ‘Different’ East
Lifestyle
What's on in Germany: events for August 2016
Sponsored Article
Five things Americans should know about voting abroad
National
Six things you need to know when moving to Germany
Travel
These 10 little-known German towns are a must see
Sponsored Article
Jordan Pass: your ticket to the experience of a lifetime
International
German scientists prove birds can sleep while flying
Sponsored Article
Jordan: where history meets adventure
Technology
London v. Berlin: Which is better for startups?
Lifestyle
13 mortifying mistakes German learners always make
Sponsored Article
6 reasons expats use TransferWise to send money
Travel
Enter if you dare: Berlin's best abandoned haunts
Sponsored Article
Why you should attend an international job fair
Lifestyle
10 rookie errors all Brits make when they arrive in Germany
Sponsored Article
Five things Americans should know about voting abroad
National
How to get German citizenship (or just stay forever)
Sponsored Article
Jordan: where history meets adventure
Technology
Brexit will turn Berlin into 'Europe’s startup capital'
Sponsored Article
6 reasons expats use TransferWise to send money
Travel
Six soothing day trips to escape the bustle of Berlin
International
'Germany needs to make UK come to its senses'
Features
Six odd things Germans do in the summer
Features
How two gay dads cut through German red tape to start a family
8,566
jobs available
Toytown Germany
Germany's English-speaking crowd