Germany GDP grows 3.6% in 2010, but experts warn against euphoria

12 January 2011 16:42  [Source: ICIS news]

TORONTO (ICIS)--Germany’s GDP grew 3.6% in 2010, the country’s government statistics agency said on Wednesday, but economic experts have warned Germans against “exaggerated euphoria”.

The agency, Wiesbaden-based Statistisches Bundesamt, said its preliminary data for 2010 showed a 3.6% increase in GDP from 2009 – the largest increase since the country’s reunification in 1990.

The recovery came after a 4.7% decline in 2009 from 2008 - Germany's sharpest recession since the Second World War.

The economic recovery occurred mainly in the spring and summer of 2010, the agency said.

“What was striking in 2010 was the fact that economic growth was not only based on foreign trade, but also on domestic demand,” it added.

Still, as in many years before the crisis, foreign trade was a major driving force for economic growth in Germany in 2010, with exports rising 14.2%, the agency said.

The German chamber of commerce (DIHK) said that given the quick recovery and sharp growth in 2010, Germany’s economy should regain its pre-crisis performance level this year.

DIHK also warned that companies were finding it increasingly difficult to hire qualified workers.

In addition, Germany’s many industrial producers were struggling with material shortages and rising raw material costs, the chamber said.

In 2011, raw material costs would rise further as many countries were curbing their supplies of metals, rare earths and other critical inputs, or were facing difficulties producing the raw materials, it added.

Economics research institute DIW Berlin warned Germans against “exaggerated euphoria” as 2010’s growth was largely the result of a “catching-up effect” after a massive decline in 2009.

In particular, export demand was likely to soften this year, said DIW economics expert Ferdinand Fichtner.

Fichtner predicted German economic growth of 2.2% in 2011. This would be driven by both exports and domestic private consumption, he said.

Chemicals industry trade group VCI has predicted 2.5% growth in Germany’s chemical production this year.

The increase in chemical production in 2011 would come after 11% growth in 2010 from 2009, and a 10% decline in 2009 from 2008.

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By: Stefan Baumgarten
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