Germany’s economy to grow 0.7% in second quarter – institute

27 May 2010 19:02  [Source: ICIS news]

TORONTO (ICIS news)--Germany’s economy is forecast to grow 0.7% in the second quarter from the first quarter when sequential growth was 0.2%, Berlin-based DIW economic research institute said in an update on Thursday.

The increase would be driven by industrial activity, as well as by building and construction, DIW said.

Industrial orders kept increasing, which was a strong indication of continued growth in Europe’s largest economy, the institute said.

However, the revival in building and construction was largely the result of  better weather after a tough winter and would be of a more “temporary nature,” it said.

Meanwhile, Germany’s private domestic consumption remained a worry as widespread concern over the euro continued to weigh on the economy, the institute said.

However, it was too early to determine precisely what extent the decline in the euro would affect the real economy, the institute said.

Germany’s chemical industry trade group VCI has pointed to the euro and government fiscal tightening and consolidation in south European countries as a factor that could affect chemical demand this year.

For the full-year, VCI has forecast Germany’s chemical production to grow 8.5% from 2009, when production fell 10% from 2008 amid the recession.

The trade group last week revised the 2010 forecast from its earlier projection of 5% growth after an unexpectedly strong first quarter, when chemical production rose 1.9% sequentially from the 2009 fourth quarter and 14.9% from the 2009 first quarter.

Economists have forecast Germany’s full-year 2010 GDP growth at 1.7%.

According to the latest revised data from Germany’s federal statistics agency, the country’s GDP grew 0.2% in the first quarter, sequentially from the 2009 fourth quarter.

This compared with sequential growth of 0.2% in the 2009 fourth quarter, 0.7% in the third quarter and 0.4% in the second quarter – and a 3.5% sequential decline in the 2009 first quarter.

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