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Germany 'optimistic' on growth despite crisis
Photo: DPA

Germany 'optimistic' on growth despite crisis

The German government insisted Thursday that Europe's biggest economy could "look to the future with optimism", despite recent disappointing economic data and falling confidence.

Published: 25 Apr 2013 12:46 CET

"2013 will be a good year," Economy Minister Philipp Rösler said, unveiling a slight upgrade in Berlin's growth forecast for the current year to 0.5 percent from a previous prognosis of 0.4 percent.

At the same time, the government is sticking to its forecast that growth will gather pace to 1.6 percent in 2014, the minister said.

"We have every reason to look to the future with optimism. The German economy is picking up. It is leaving the winter behind it. The labour market is keeping up its momentum, with employment set to rise and unemployment expected to fall," Rösler said in a statement.

The government's updated forecast is nevertheless slightly more cautious than others.'

Last week, Germany's leading economic institutes predicted in their annual spring report that gross domestic product (GDP) would expand by 0.8 percent in 2013 and then by 1.9 percent.

The think-tanks - Ifo in Munich, IfW in Kiel, IW in Halle and RWI in Essen - said the economic skies above Germany appear to be clearing and the recovery of Europe's top economy looks set gather momentum during the course of this year.

The International Monetary Fund, too, is slightly more optimistic than Berlin, pencilling in growth of 0.6 percent for this year.

Germany has managed to avoid the recession that the eurozone's long-running sovereign debt crisis has pushed many countries into. But the economy contracted in the final quarter of 2012, bringing overall full-year growth down to just 0.7 percent from 3.0 percent the previous year.

And a raft of recent forward-looking indicators, including the Ifo business climate index, have started to decline, fuelling concerns that the nascent recovery might already be running out of steam.

Rösler insisted that the government had strengthened the conditions for Germany "to be an anchor of stability in Europe again this year." The favourable trend on the labour market would continue, he said.

"The jobless total will this year remain stable at the lowest level in 20 years. And next year, the average annual jobless number will decline by 90,000. That will bring the jobless rate down to 6.6 percent," Rösler said.

In 2012, the German jobless total stood at an annual average 2.897 million and the jobless rate stood at 6.8 percent.

On the inflation front, the government predicted that consumer price index will rise by 1.7 percent in 2013 and by 1.9 percent next year after an increase of 2.0 percent in 2012.

The European Central Bank defines price stability as inflation rates close to but just below 2.0 percent.

AFP/mry

The Local (news@thelocal.de)


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