OECD sees German growth slowing in 2012

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14 Feb, 2012 Updated Tue 14 Feb 2012 11:11 CEST
OECD sees German growth slowing in 2012

The Organisation for Economic Co-operation and Development (OECD) has predicted that Germany, Europe's top economy, will grow by 0.4 percent this year, the Economy Ministry in Berlin said on Tuesday.


"Due to weak foreign trade and the debt crisis in the eurozone, the OECD sees price-adjusted growth in gross domestic product in Germany of 0.4 percent," the ministry said, ahead of the report's official publication.

The German government itself expects growth of 0.7 percent this year and has insisted there is no danger of the world's second-largest exporter after China falling into recession.

The German economy suffered badly during the 2008 global financial crisis, registering its worst recession in six decades.

But due to multi-billion-euro stimulus packages and a scheme allowing workers to reduce their hours while keeping their jobs, Chancellor Angela Merkel managed to keep a lid on unemployment and growth rebounded strongly.

After shrinking by around 5.0 percent in 2009, Germany marked record growth of 3.7 percent in 2010 and continued to expand at a decent clip of 3.0 percent last year.

German unemployment currently stands at a record low seasonally-adjusted rate of 6.7 percent.

Consumer and business confidence figures have also remained surprisingly strong despite the euro debt crisis, suggesting that Germany will continue to act as a strong anchor in the eurozone storm.

However, even Germany's resilience will not be able to withstand completely a eurozone crisis that has threatened to tip the 17-nation zone as a whole into recession, economists say. Germany's exports growth motor certainly slowed towards the end of last year.

Official gross domestic product (GDP) figures for the final quarter of 2011 are expected to be published on Wednesday.

The national statistics office Destatis has estimated that GDP likely shrank by "around a quarter of a percentage point" in the period from October to December as the eurozone debt crisis increasingly puts the brakes on growth.

The OECD report was due to be published officially at 12:30 pm (1130 GMT).

Economy Minister Philipp Rösler said in a statement: "The OECD report underlines that the federal government's economic policy is exemplary.

"In particular, (the report) praises German labour market policy and said that the progress in this area should be an example for other countries. This is an excellent result that should however push us to continue along this path.

"We have to strengthen further the growth potential in this country," the minister stressed.



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