03 September 2009 15:11 [Source: ICIS news]
TORONTO (ICIS news)--The real threat to ?xml:namespace>
As the economy rebounds, the European Central Bank (ECB) would be challenged to withdraw the liquidity it injected into the market in past months without strangling the recovery, the Wiesbaden-based group said.
Its comments came as the ECB decided earlier on Thursday to maintain interest rates at a record low of 1%.
BAVC, for its part, sees only a small deflationary risk for Europe's largest economy, even though German consumer prices fell 0.5% in July, compared with July 2008, marking the first such decline in 22 years, it said.
Once energy and food prices were excluded, consumer prices were up 1.4% this year, it said.
So far, the decline in prices - primarily due to the drop in oil prices from last July’s peak of over $140/bbl - had strengthened German consumer purchasing power and confidence, BAVC said.
Each percentage point decline in inflation translated into additional consumer purchasing power of some €15bn ($21bn), it added.
Germany’s chemical production rose 2.5% in the second quarter from the first after nine months of declines, and sales rose 1.3% to €34.3bn, Germany’s chemical producer association, VCI, said this week.
But while the worst was over for the chemicals industry, VCI maintained its earlier forecast of a 10% decline in chemical production and a 12% decline in the sales for the full year.
Forecasters expect Germany's economy to grow 0.8% in the third quarter from the second quarter, while the full-year decline for 2009 could be less than 5%, below earlier forecasts of a drop of more than 6% this year.
($1 = €0.70)
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