German gov’t sees 1 pct growth for 2012

German gov’t sees 1 pct growth for 2012

FRANKFURT - Agence France-Presse
German gov’t sees 1 pct growth for 2012

The German gov’t has revised it growth targets to 1 percent for 2012 and 2013, from 0.7 percent and 1.6 respectively, a sharp downward revision to the 2013 target. REUTERS photo

The German government is upgrading its growth forecast for this year, but has cut its prognosis for next year, the business daily Handelsblatt reported on Oct. 12.

Berlin, which is scheduled to publish its latest updated growth forecasts next Wednesday, is penciling in growth of 1.0 percent for both 2012 and 2013, the newspaper said, quoting government sources.
That represents an increase for this year from an earlier prognosis of 0.7 percent, but a sharp downward revision for next year from a previous forecast of 1.6 percent.

On Oct 11, Germany’s leading economic think tanks pared back their forecast for this year to 0.8 percent and slashed the prediction for next year in half to 1.0 percent, warning there was a “great danger” that Europe’s top economy could fall into recession.

Chancellor Angela Merkel also acknowledged that after two “very good” years of growth, that this year would be “weaker.” German gross domestic product (GDP) expanded by 4.2 percent in 2010 and by 3.0 percent in 2011.

“If you believe the forecasts -- I cannot be more precise -- we will have maybe 0.8 percent, 0.9 percent, around one percent,” Merkel told reporters after meeting Hungarian Prime Minister Viktor Orban in Berlin on Oct. 11.

Merkel to keep domestic motor humming

Merkel also vowed to do everything in her power to keep Germany’s domestic economic motor humming in a bid to prevent the sputtering eurozone engine from stalling completely.

“Because our total public deficit is today comfortably under three percent, it is our job to do something for the recovery of Europe’s economy,” she said.

“We have in mind the reduction of taxes in some areas for example to make clear that we want to do everything here at home to make sure that domestic demand is going well. That’s the only thing we can do,” she said.

Merkel has come under fire internationally for not doing enough to spur growth by encouraging consumption in Germany, insisting on austerity at all costs.