Bundesbank may raise German growth forecast

16th February 2015, Comments 0 comments

Germany's central bank hailed Monday the robustness of the country's economy at the end of last year and suggested it could upgrade its growth forecast for this year.

The German economy, Europe's biggest, grew by a stronger-than-expected 0.7 percent in the fourth quarter of last year, shrugging off the temporary lull in the preceding quarters.

In its latest monthly report, the Bundesbank said consumer spending was the main driving force behind the increased momentum, spurred on by record low unemployment and falling energy prices. A weaker euro also gave exporters a boost, the central bank added..

The 0.7-percent expansion in gross domestic product (GDP) in the final quarter of 2014 lifted growth for the whole year to 1.6 percent.

"Against the background of more optimistic income expectations, increased purchasing power and robust consumer sentiment, household consumption has become the main driving force behind the recovery for now," the Bundesbank wrote.

In addition, the tangible decline in the euro against the dollar will boost export opportunities outside the single currency area, it continued.

"In view of the brighter overall economic picture, it is feasible that growth during the course of the year will come out noticeably higher than initial forecasts drawn up last autumn," the report said.

At the beginning of December, the Bundesbank had halved its growth forecast for 2015 to 1.0 percent and trimmed its 2016 estimate to 1.6 percent from 1.8 percent.

© 2015 AFP

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