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Germany to grow 1.5 percent in 2015: Brussels

Tom Barfield · 5 Feb 2015, 11:59

Published: 05 Feb 2015 11:59 GMT+01:00

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"Germany's economic growth is expected to strengthen gradually", European Commission analysts write in their 2015 winter forecast, noting that the country benefits from a strong labour market, good conditions for domestic consumption and improving demand for its products abroad.

Economic recovery in Germany was slow in 2014, with growth of 0.1 percent in the final three months of the year following a fall in activity of 0.1 percent in the previous quarter.

But overall, the year added 1.5 percent to the size of Germany's Gross Domestic Product (GDP).

The first months of 2015 are expected to be brighter, as the effects of increased orders from German industry, lower oil prices and increasing confidence make themselves felt.

Commission experts believe Germany will grow a further 1.5 percent in 2015 before jumping to two percent next year.

And they are less concerned than some in Germany over the impact of the new national minimum wage, saying only that it "may have some negative employment effects" - and predicting employment growth of 0.9 percent this year.

That fit in with a generally improving picture across Europe, with Commissioner for Economic and Financial Affairs Pierre Moscovici saying that "Europe's economic outlook is a little brighter today than when we presented our last forecasts".

But the provisional nature of the recovery will be on Finance Minister Wolfgang Schäuble's mind on Thursday as he meets with his Greek counterpart Yanis Varoufakis of the left-wing populist Syriza party.

Schäuble has said he will aim to make as few concessions as possible to Varoufakis, who is trying to find a way out from under what he says is an impossible debt burden on his country.

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Schäuble will be encouraged, though, by the Commission's evaluation of his sought-after "black zero" policy of getting public accounts into surplus.

"The general government balance is expected to show a small surplus in 2015 and 2016... the gross debt-to-GDP ratio is set to decrease rapidly," the economists write.

SEE ALSO: Germany hits export surplus record in 2014

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Tom Barfield (tom.barfield@thelocal.com)

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