• Germany's news in English
 

Think tanks scale back growth forecast

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.

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
Greece crisis
Greek offer 'no basis for discussion': Schäuble
Pro-EU Greeks demonstrate outside the Athens parliament on Tuesday. Photo: DPA

Greek offer 'no basis for discussion': Schäuble

German Finance Minister Wolfgang Schäuble said Wednesday crisis-hit Greece was sending mixed signals in debt talks and called on its government to "clarify its position" before negotiations with creditors can resume. READ  

Weathermen issue snow alert in heatwave
Could this be July in North Rhine-Westphalia? Photo: DPA

Weathermen issue snow alert in heatwave

The German Weather Service (DWD) issued a weather warning for North Rhine-Westphalia (NRW) on Wednesday predicting 5 to 10 cm of snow and winds of up to 60 km/h. READ  

Analysis
How German media shaped the Greece crisis
Angela Merkel faces a battery of microphones and cameras at a eurozone summit in Brussels on June 22nd. Photo: DPA

How German media shaped the Greece crisis

It's often said that German Chancellor Angela Merkel is the one person who truly matters when it comes to how the eurozone deals with Greece. But how much freedom does 'Mutti' really have in the face of the public and the media? READ  

Women trade punches over neglected dog poo
'This is not a dog toilet.' Photo: DPA

Women trade punches over neglected dog poo

Bergisch Gladbach in North Rhine-Westphalia, hometown of supermodel Heide Klum, was once linked in Germans' minds with the catwalk. But now it is just as infamous for a dog walk, after two women came to blows over a mound of pooch poo. READ  

Referee costs Germany dear against USA
Head coach Silvia Neid (r) with Celia Sasic (l) on the bench. Photo: DPA

Referee costs Germany dear against USA

Germany coach Silvia Neid said she found the referee's decision-making 'sad' in her country's 2-0 semi-final defeat to the USA in the Women's World Cup in Montreal on early Wednesday morning. READ  

Train strikes
Train drivers and Bahn bury the hatchet
Three ICE (intercity) trains stand in a siding. Photo: DPA

Train drivers and Bahn bury the hatchet

The Train Drivers' Union (GDL) and Deutsche Bahn (DB) have finally agreed to end their dispute over drivers' work conditions, offering hope that nine months of rail chaos has finally come to an end. READ  

European heatwave
Keep cool and stay safe in the July heatwave
A couple leaping into an open-air pool in Freiburg. Photo: DPA

Keep cool and stay safe in the July heatwave

Here's how to keep cool as the mercury soars during this week's heatwave in Germany. And don't forget your pets! READ  

Former judge to see NSA target list
Photo: DPA

Former judge to see NSA target list

The Bundestag (German parliament) inquiry into spying by the US National Security Agency (NSA) has chosen a former judge to examine lists of targets given to German spies by the Americans. READ  

Germanwings tragedy
Germany learns lessons on pilots’ mental health
Transport Minister Alexander Dobrindt (left) and aviation safety task force leader Matthias von Randow. Photo: DPA:

Germany learns lessons on pilots’ mental health

In response to the Germanwings flight tragedy, Minister of Transport Alexander Dobrindt presented plans to strengthen mental health care for pilots while Germanwings announced further compensation for relatives of the flight's victims. READ  

Germany: land of cheap beer and drunkards?
Getting müllered? Football star Thomas Müller enjoys a Mass. Photo: DPA

Germany: land of cheap beer and drunkards?

It's official. If getting drunk on a park bench is your thing, look no further than Germany as an ideal location. A study released on Monday shows it's cheap. And you'll have plenty of company. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Society
An eye for an eye? Mum protects child in playground with pepperspray
Politics
Follow our LIVE blog as Europe holds breath over Greece crisis
National
As it happened: Queen Elizabeth's final day in Germany
National
As it happened: Queen Elizabeth's second day in Germany
National
Queen Elizabeth II's first day in Germany - as it happened
National
Bus passengers tell fake racists where to get off
Politics
What's really in the Queen's handbag?
National
Germans say USA doesn't respect freedom
National
Yes, you CAN buy adult e-books before 10pm in Germany
VIDEO: Watch a 93-metre turbine crash to earth in slow motion
Gallery
Who's got a shot at the German Film Awards
Rhineland
Anger over 'child-free' beer garden
National
How do you do, Majestät?
National
Man defends right to pee in public with tear gas
Features
The Germans who won Waterloo for the British
Frankfurt
Should Germany ban circus animals?
Hamburg
Where people are having the most sex in Germany
Culture
Who Wants to be a Millionaire? Not this student...
National
Dresden's three-decade-long red light
Politics
Upper house calls for gay marriage now
Berlin
Berlin named 3rd-best city worldwide
Sport
In search of the toughest firefighter
Business & Money
German firms shine for European engineering students
Gallery
Hitler's paintings up for auction
National
German's 70-year search for murdered US pilot
Politics
What the G7 leaders agreed at Elmau
Business & Money
What really makes Germans happy
National
Playmobil builder leaves worldwide legacy
National
The car share that became a drug run
Politics
What Snowden revealed to Germany
Rhineland
Why wolf cubs are being raised by hand
National
Hitler's booze cave found
National
Environment makes Germany worth living in
Culture
What's top of the charts in June
Gallery
Germany's most beautiful cycle routes
Business & Money
The business case for Britain in the EU
Rhineland
Why farmers are free to pong up the countryside
National
German restaurants among world's best
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

6,946
jobs available
Toytown Germany
Germany's English-speaking crowd