Germany to see sustained GDP growth after strong Q1 - Bundesbank

20 May 2011 19:28  [Source: ICIS news]

LONDON (ICIS)--Germany’s economic growth will continue for a long time after a strong first quarter, the country’s central bank said on Friday.

The Bundesbank said after a “sparkling start” into 2011, with 1.5% sequential first-quarter growth, the recovery in Europe’s largest economy is widening.

However, as first-quarter GDP growth was partly driven by “catch-up effects,” sequential growth rates should slow down somewhat in coming quarters.

Germany’s boom, coming on the back of the global recovery, has spread from the country’s export-based industries to all sectors of the economy, the bank said.

In many industries, firms are running at high capacity utilisation, prompting them to invest and employ additional staff, it said.

Meanwhile, a strong labour market and higher wages in many sectors, including the chemicals industry, are encouraging consumers to purchase big-ticket items, thus strengthening private consumption.

However, the wage hikes are partly offset by rising inflation on the back of high oil prices, the bank added.

Research institutes expect 2.8% year-on-year GDP growth this year in Germany, according to the latest forecasts.

In related news, a German chemical trade group this week doubled its full-year 2011 forecast for the country's chemical production to 5% after a strong first-quarter performance.

Read Paul Hodges’ Chemicals and the Economy Blog


By: Stefan Baumgarten
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