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ECONOMY

German exports due a boost in 2013

Germany, one of the world's top exporters, should post a new record for exports next year, driven by demand from Asia, the head of the BGA federation of exporters and wholesalers said on Sunday.

German exports due a boost in 2013
Photo: DPA

“We expect an increase of up to five percent in exports to €1.158 trillion in 2013 and a 5.5-percent rise in imports to €980 billion,” said BGA chief Anton Börner in a new year’s message.

Despite the eurozone crisis, Germany achieved record exports in 2012, added Börner, amounting to €1.103 trillion, and a trade surplus of €174 billion.

Börner said the bullish projection was based on “stability and no new volatility on the financial markets. Europe, the United States and China have a lot of homework to do in the new year in this respect,” he said.

He said order books for next year were full “especially from the growth markets in Asia” and added that the low value of the euro on the currency markets was helping trade with the United States and Japan.

However, he cautioned that “the European debt crisis will be with us for a long time yet” and said he was especially concerned about what he said were “increasingly protectionist trends in several eastern European countries.”

“By going alone down this protectionist road, these countries are harming not only our exports but also massively harming themselves,” said Börner.

AFP/bk

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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