18 September 2013 19:06 [Source: ICIS news]
LONDON (ICIS)--Germany’s GDP will grow by only 0.4% in 2013, but economic growth in 2014 should be much stronger, two of the country’s leading research institutes said in separate forecasts on Wednesday.
Berlin-based DIW and Essen-based RWI both pegged Germany's full-year 2013 GDP growth at 0.4%, saying that while there were signs of improvement after a weak start to the year, the recovery would be modest.
However, for 2014 DIW forecasts 1.7% GDP growth for Europe’s largest economy while RWI forecasts 1.9% growth, with the expansion next year primarily driven by domestic demand.
In addition, some of Germany’s main exports markets, in particular the US, are improving, and the eurozone appears to have overcome its recession, the institutes said.
However, DIW president Marcel Fratzscher warned that there remained significant risks for Germany’s economy.
"There is still uncertainty in the global economy, and the crisis in the eurozone has not yet been resolved," Fratzscher said.
DIW economist Ferdinand Fichtner added: "If the eurozone crisis should resurge – and one cannot exclude this risk – then this could prompt German consumers and companies to cut back on their spending."
RWI said that the European Central Bank (ECB) had taken measures to address the eurozone crisis, thus providing EU governments with the time to advance structural reforms.
However, the calming on financial markets seemed to have lessened the pressure on governments to reform their budgetary systems, the institute said.
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