Bundesbank sees record growth in 2010

The German economy, Europe's biggest, should post record growth of 3.6 percent this year followed by expansions of 2.0 percent in 2011 and 1.5 percent in 2012, the central bank forecast on Friday.

Bundesbank sees record growth in 2010
Photo: DPA

Support from strong exports is expected to boost internal demand as well, with a pick-up in household consumption providing yet another pillar of growth in what should be a “more broad-based” upswing, a Bundesbank statement said.

The forecast illustrates a growing split between robust activity in core eurozone countries and weak growth or recession in members on the periphery of the 16-nation bloc such as Greece, Ireland and Spain.

For 2010, the Bundesbank estimated that economic activity would expand by its fastest pace since German reunification in 1990.

The German economic recovery “will continue in the next two years following the impressive catching-up process in the current year,” a statement said.

“Exports will remain the main driving force behind the upturn” and strong trade will also boost domestic demand, the bank forecast.

Investments in capital goods and construction will benefit from low interest rates as well, while household consumption will be underpinned by a healthier labour market and higher wages, it added.

In 2012, the number of unemployed workers is expected to drop below three million, while the unemployment rate should fall from 7.5 percent at present to 6.9 percent, the forecast said.

Inflation was tipped to come in at 1.7 percent next year and edge down to 1.6 percent in 2012.

The growth estimates are slightly more conservative than those presented by the European Commission for Germany, which foresee growth of 3.7 percent this year followed by 2.2 percent and 2.0 percent in the following two years.

In peripheral eurozone countries meanwhile, austerity budgets aimed at curbing excessive public deficits and reducing debt are expected to weigh heavily on the economy.

“There is a big unknown about all the consolidation measures, how they will affect the domestic economy, especially private consumption, in many countries,” UniCredit economist Alexander Koch told new agency AFP.

The European Union’s Eurostat statistics service has forecast a contraction of 4.2 percent in Greece this year, followed by a further drop of 3.0 percent in 2011.

In Ireland, which has just received a massive bail-out from the EU and International Monetary Fund, Eurostat sees a contraction of 0.2 percent followed by growth of 0.9 percent. And in Spain, a much larger eurozone economy, the EU forecast is for a drop of 0.2 percent this year and growth of 0.7 percent in 2011.

The Bundesbank warned moreover that downside risks to its own forecast “originate from the persistent uncertainties in the financial markets due to the fragile position of public finances in a number of industrial countries.”

But Koch noted that “in Germany for the time being, with dependable exports you clearly have a functioning business model.”

“The growth outlook and the situation concerning private household debt is therefore much better here in Germany, it’s a much better growth environment.”


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REVEALED: EU plans digital-only Schengen visa application process

Soon those non-EU nationals requested to have a Schengen visa to travel to European countries will no longer need to go to a consulate to submit the application and get a passport sticker, but will be able to apply online. 

REVEALED: EU plans digital-only Schengen visa application process

The European Commission has proposed to make the Schengen visa process completely digital.

The special visa, which allows to stay for tourism or business (but not work) in 26 European countries for up to 90 days in any 6-month period. 

Nationals of third countries such as South Africa, India, Pakistan and Sri Lanka need the Schengen Visa to visit Europe, but they are not needed for other non-EU nationals such as Britons or Americans. You can see the full list of countries who need a Schengen visa here.

The proposal will have to be approved by the European Parliament and Council, but is in line with an agreed strategy that EU governments are keen to accelerate in the aftermath of the pandemic. 

Once agreed, the system will be used by the countries that are part of the border-free Schengen area. These include EU countries, excluding Ireland (which opted out), and Bulgaria, Romania, Croatia and Cyprus (which do not issue Schengen visas). Iceland, Norway, Lichtenstein and Switzerland, which are not EU members but have signed the Schengen Convention, will be part of the new system too.

Paper-based processes required applicants to travel to consulates to submit the application and collect their passports with the visa, a procedure that “proved problematic during the COVID-19 pandemic,” the Commission said.

Some EU countries have already started to switch to digital systems but not all accept online payments for the visa fees. 

When the new system will be in place, the Commission says, applicants will be able to check on the EU Visa Application platform whether they need a visa. If so, they will create an account, fill out the application form, upload the documents and pay. 

The platform will automatically determine which Schengen country will be responsible for the application and applicants will be able to check their status and receive notifications. Travellers will then be able to access the visa online, and if needed extend it too.

“Half of those coming to the EU with a Schengen visa consider the visa application burdensome, one-third have to travel long distance to ask for a visa. It is high time that the EU provides a quick, safe and web-based EU visa application platform for the citizens of the 102 third countries that require short term visa to travel to the EU,” said Commissioner for Home Affairs Ylva Johansson.

“With some member states already switching to digital, it is vital the Schengen area now moves forward as one,” said Commission Vice-President for Promoting our European Way of Life, Margaritis Schinas.

However, first-time applicants, people with biometric data that are no longer valid or with a new travel document, will still have to go to a consulate to apply.

Family members of citizens from the EU and the European Economic Area, as well as people who need assistance, will also be able to continue to apply on paper. 

The EU Visa Application platform will be used from third countries whose nationals must be in possession of a visa to enter the EU and is different from the ETIAS (European Travel Information Authorisation), which is currently under development.

The ETIAS will be used by non-EU nationals who are exempt from visas but who will need to apply for a travel authorisation prior to their trip. This will cost 7 euros and will be free for people below the age of 18 and above 70. 

Based on the discussion between the European Parliament and Council, the Commission could start developing the platform in 2024 and make it operational in 2026. EU countries will then have five years to phase out national portals and switch to the common online system.