Institutes raise Germany’s 2012 GDP forecast to 0.9%

19 April 2012 19:24  [Source: ICIS news]

LONDON (ICIS)--Leading German economics institutes have raised their 2012 GDP forecast for the country to 0.9%, from previous 0.8%, they said on Thursday.

Europe’s largest economy is on an upswing after a weak winter period as its industrial firms are highly competitive on export markets because of the weak euro, the institutes said in a joint study commissioned by the country's economics ministry.

The price competitiveness of German companies is now higher than at any time over the past 30 years, they said.

Germany’s exports therefore continue to rise, despite the slow pace of improvement in the global economy and recessions in many eurozone countries, the institutes said. The eurozone is a key market for many of Germany’s industrial firms, including chemical producers.

Acute risks for the global economy decreased in the spring of 2012, compared with autumn last year, the institutes said.

Confidence among businesses and consumers, which was knocked hard in the second half of 2011, has recovered in most regions since the beginning of 2012, they said.

“The pace of world output has also picked up slightly in recent months, after clearly losing impetus during the second half of last year,” they said.

Nevertheless, the outlook for the global economy remains subdued as the European debt crisis remains unresolved and continues to pose a major threat to the world economy.

Additional negative factors include oil prices, which have soared in recent weeks. Moreover, the pace of economic growth in China and other emerging economies has slowed down too, the institutes said.

Despite the current upturn in many confidence indicators, the institutes do not expect a strong upswing in the world economy.

Financial policy in many of the world’s key advanced economies, and especially in several eurozone countries, is expected to have a dampening effect, they said.

Moreover, private households and businesses in many economies are still attempting to reduce their debts, they added.

For 2013, the institutes forecast Germany’s GDP growth at 2.0%.

In Germany’s chemical industry, producers trade group VCI has said it expects no year-on-year growth in the country’s chemical production in 2012.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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