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Germany fourth best place to do business

Germany has jumped to fourth place in global competitive rankings and is only behind Switzerland, Singapore and Finland as a good place to do business, according to a report launched on Wednesday.

Germany fourth best place to do business
Photo: DPA

The World Economic Forum’s Global Competitiveness Report for 2013-2014 showed Germany was two places up from where it was last year.

The report used 12 criteria to judge each country’s competitiveness, including infrastructure, financial stability and the education system. But innovation was the key to climbing the rankings, according to the report’s authors.

Klaus Schwab, founder of the Global Competitive Index, said countries were increasingly being defined on how innovative they were rather than on how much industry they had.

Even so, the traditionally industry-based German economy was ahead of the United States in the ranking, even though the US had also climbed two places from last year. Germany was also ahead of the United Kingdom which dropped from eighth to tenth place. Germany overtook Sweden and the Netherlands to reach fourth.

One of the authors Margareta Drzeniek-Hanouz said: “We are seeing an improvement in Germany,” the Welt newspaper reported.

Southern European economies were much further down the list with Spain (35th), Italy (49th), Portugal (51st) and Greece (91st).

The Local/tsb

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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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