Germany boosts official 2010 growth forecast to 1.4%

27 January 2010 16:24  [Source: ICIS news]

TORONTO (ICIS news)--Germany’s economy should grow by 1.4% in 2010, after a 5.0% decline in 2009 from 2008, the country’s government said on Wednesday in its official economic report and forecast for the year.

The 1.4% for 2010 is up by 0.2 percentage points from 1.2% growth the government had forecast in October.

Even though capacity utilisation in Europe’s largest economy was still very low, rising exports should drive growth going forward, the government said in its “Jahreswirtschaftsbericht 2010.”

Exports were expected to increase by 5.1%, after a 14.7% decline in 2009 from 2008, it said.

However, even with the increase, exports were not expected to regain their pre-crisis level this year, it added.

At the same time, producers would continue to struggle with high costs and were likely to cut more jobs, with the unemployment rate forecast to average 8.9% in 2010, up from 8.2% in 2009, the government said.

To help the economy, the government reduced the overall tax burden for families and companies by a total €24bn ($34bn), it said.

At the same time, it promised a comprehensive reform to simplify the tax system and to reduce bureaucracy.

While Germany’s economy had bottomed out, the recovery would be “slow and burdensome,” underlining the need for tax relief, economics minister Rainer Bruderle commented.

Germany’s chemical producers have forecast a 5% increase in chemical production for 2010, after a 10% decline in 2009 from 2008.

But in an economics update last week, Wiesbaden-based chemical employers group BAVC said even with 5% growth in 2010, chemical production would still be below its 2006 level.

At the same time, Germany’s chemical industry would be coping with much larger capacities as massive new production being built up in the Middle East was sharply accelerating competitive pressures on global chemical markets, the group said.

($1 = €0.71)

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