• Germany's news in English

German economy enjoying 'solid upturn'

AFP · 15 Apr 2014, 15:15

Published: 15 Apr 2014 15:15 GMT+02:00

Facebook Twitter Google+ reddit

Economy Minister Sigmar Gabriel said that economic growth "is on a broad and stable footing," as he predicted that gross domestic product (GDP) growth would accelerate to 1.8 percent this year and two percent next year compared with a meagre 0.4 percent in 2013.

"The German economy is in a solid upturn," Gabriel insisted. "The driving force is domestic demand," the minister explained, pointing to "continued favourable developments on the labour market, strong increases in household income, positive business sentiment and rising investment."
Gabriel's forecasts are in line with the predictions of other key observers.
Germany's central bank is pencilling in growth of 1.7 percent for 2014 followed by two percent for 2015 and the European Commission is projecting growth rates of 1.8 percent and 2.0 percent respectively.
Just last week, Germany's leading economic think tanks raised their growth forecast for this year to 1.9 percent, followed by growth of two percent next year.

Clouds on horizon

However, some clouds seem to be beginning to form in the economic skies above Germany.
The economic institutes warned of headwinds from new government policies, such as the decision to lower the retirement age to 63 and the introduction of a fixed national minimum wage from 2015.
And in the more immediate term, too, geopolitical factors could also throw a spanner in the works of the nascent recovery.
The Ukraine crisis is hitting the investment climate in Germany which has close business and energy links with both Russia and Ukraine.
Investor sentiment fell to the lowest level for eight months in April, a leading survey found.
The widely watched investor confidence index calculated by the ZEW economic institute fell by 3.4 points to 43.2 points in April, the lowest level since August 2013.
It was the fourth straight monthly drop in a row and steeper than analysts had been expecting.
ZEW president Clemens Fuest pointed to uncertainty generated by the conflict in Ukraine.
One mitigating factor was that a component of the index measuring financial market players' view of the current economic situation in Germany rose by 8.2 points to 59.5 points in April, its highest level since July 2011.

No stagnation or recession
Berenberg Bank economist Christian Schulz said that while the crisis in Ukraine "is continuing to sow uncertainty among financial analysts," and could lead to a slowdown in German economic momentum over the coming six months, there was no prospect of new stagnation or even recession."
The undercurrent remained firm, he said.
"And that may act as a shield for the eurozone recovery overall," Schulz said.
ZEW also calculates a sentiment index for the eurozone as a whole and that slipped only slightly by 0.3 points to 61.2 points in April.
Story continues below…
ING DiBa economist Carsten Brzeski said "the geopolitical conflict close to Germany's backyard, concerns about the Chinese economy and the recent equity market correction have clearly dented investors' optimism."
After the excellent start to the year, the German economy was now starting to feel some headwinds, Brzeski said.
"More and more gusts of wind, particularly from the East, could easily disturb real spring fever on the island of happiness," Brzeski warned.
Capital Economics economist Jonathan Loynes found the ZEW survey "brought further evidence of strength in the German economy. But the fall in expectations raises some concerns ...over the sustainability of the recovery further ahead."

For more news from Germany, join us on Facebook and Twitter.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German town, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

Student fined for spying on women via their webcams
Photo: DPA

Student from Munich fined €1,000 for spying on 32 different computers, using their webcams to take photographs, or record their keyboard history.

This is how much startup geeks earn in Germany
Photo: DPA

A comprehensive new survey of 143 startup founders shows how much you are likely to be earning at a German startup, from entry level all the way up to sitting on the board.

Man dies after beating for peeing near Freiburg church
The Johannes Church in Freiburg. Photo Jörgens Mi/Wikipedia

A middle-aged man from southern Germany has died after being attacked by a group of men who took umbrage with the fact he was urinating in the vicinity of a church.

The Local List
Seven German celebrities with uncanny doppelgängers
Former Berlin mayor Klaus Wowereit and actor Alec Baldwin. Photo: DPA; Gage Skidmore, Wikimedia Commons

Check out these seven look-a-likes of well known German figures - we admit that some are more tenuous than others...

Israel seeks to buy three new German submarines: report
A Dolphin class submarine. Photo: DPA

Israel is seeking to buy three more advanced submarines from Germany at a combined price of €1.2 billion, an Israeli newspaper reported Friday.

Here’s where people live the longest in Germany
Photo: DPA

Germans down south seem to know the secret to a long life.

More Germans identify as LGBT than in rest of Europe
Photo: DPA

The percentage of the German population which identifies as lesbian, gay, bisexual or transgender is higher than anywhere else in Europe, according to a new study.

'Reichsbürger' pair attack police in Saxony-Anhalt
File photo: DPA.

A "Reichsbürger" and his wife attacked police officers on Thursday, just a day after another Reichsbürger fatally shot an officer in Bavaria.

Five things not to miss at the Frankfurt Book Fair
Photo: DPA

From consulting a book doctor to immersing yourself in an author's world with the help of virtual reality, here are five things not to miss at this week's Frankfurt Book Fair, the world's largest publishing event.

Sponsored Article
How to vote absentee from abroad in the US elections
10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
Sponsored Article
How to vote absentee from abroad in the US elections
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd