Germany sticks to 2010 growth forecast

21st April 2010, Comments 0 comments

The German economy, Europe's largest, will grow by 1.4 percent this year, Economy Minister Rainer Bruederle said on Wednesday, leaving a previous forecast made in January unchanged.

Next year, the economy should perform slightly better, Bruederle said, with growth of 1.6 percent driven by exports, the backbone of the German economy.

"The economic recovery is coming from abroad. The improvement in the global economy and world trade is supporting the German economy to a great extent," Bruederle told reporters in Berlin.

The economy was also expected to see stronger domestic demand next year, he said.

He said the German labour market was "unbelievably robust", and the fears of a sharp rise in unemployment due to the financial crisis had failed to materialise.

The government's forecasts were slightly more optimistic than those of the International Monetary Fund which last month slashed its projection of output in Germany to 1.2 percent for 2010.

The country's central bank, the Bundesbank, said earlier this week that output in the first quarter shrank as a result of a bitterly cold winter that stifled construction activity and kept shoppers at home.

The fourth quarter of 2009 had already marked a slowdown in the economy, with gross domestic product (GDP) stagnating after growth of 0.7 percent in the third quarter and 0.4 percent in the second.

The German federal statistics office is due to publish a preliminary estimate of first-quarter GDP on May 12.

The economy is still recovering from its worst recession in more than six decades, with GDP shrinking by five percent in 2009.

© 2010 AFP

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