German Bundesbank raises 2011 growth forecast to 3.1%

10th June 2011, Comments 0 comments

The German Bundesbank on Friday raised its growth forecast for this year to 3.1 percent for Europe's biggest economy, up from 2.5 percent previously.

For next year, the economy should grow by 1.8 percent, the Bundesbank said in a statement which underlined the "German economy's rebound" after the global financial and economic crisis.

The new forecast is in line with expectations by most economists -- and by the International Monetary Fund -- who suggested this year's growth would reach 3.0 percent after the publication of official figures showing 1.5 percent growth in the first quarter.

The German government is officially banking on growth of 2.6 percent, but Chancellor Angela Merkel recently acknowledged it might exceed 3.0 percent.

Last year's GDP rose by 3.6 percent after a 4.7 percent drop the previous year.

Both exports and internal demand have been fuelling growth.

Economic recovery has accelerated in recent months, the central bank said in a report last month.

German industrial production will help fuel expansion and exports will once again play a leading role, the bank said.

"In addition, German exporters are benefiting from recent changes at the level of international exchange rates," the Bundesbank said, a reference to the euro's fall in value against other major currencies.

© 2011 AFP

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