Economic growth in Germany to continue through 2012 – Bundesbank

03 December 2010 16:22  [Source: ICIS news]

TORONTO (ICIS)--Germany’s economy will continue to grow in the next two years, with exports remaining its driving force, although growth will become more broad based, the country’s central bank said on Friday.

The Bundesbank forecast German GDP growth at 3.6% for 2010, 2.0% in 2011 and 1.5% in 2012.

The 3.6% growth forecast for 2010 is in line with the government’s recent 3.5% growth projection. However, it is up from the bank's earlier growth projections of 3.0%, in August, and 1.9%, in June.

“The recovery in the German economy will continue in the next two years following the impressive catching-up process in the current year,” the bank said.

The upturn in Europe’s largest economy would become increasingly broad based, it said.

While exports would remain the economy’s primary driver, “external impulses” would have a growing effect on domestic economic activity, it said.

Investment in machinery and equipment as well as in construction were boosted by low interest rates, while private consumption was benefiting from growing employment and higher wages, the bank said.

The unemployment rate should continue to fall from the current 7.5% to 6.9%, or below 3m, by 2012.

Meanwhile, average consumer prices could go up, by 1.7% in 2011 and 1.6% in 2012.

However, the bank warned that its projections were subject to downside risks from “persistent uncertainties in the financial markets due to the fragile position of public finances in a number of industrial countries”.

Meanwhile, Germany’s chemical employers on Friday warned union IG BCE against “euphoric” wage demands in 2011 negotiations as the country’s chemical producers had not yet regained their pre-crisis performance levels.

Germany’s chemical production is forecast to grow 11% this year, even though production growth slowed in the third quarter, according to forecasts by the country’s chemical producers group, VCI. The growth would come after a 10% decline in 2009 from 2008.

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