German institutes halve 2013 growth forecast, see 2014 rebound

17th October 2013, Comments 0 comments

Germany's leading economic think tanks Thursday halved their 2013 growth forecast to 0.4 percent but said domestic demand would help drive a strong rebound next year.

The four institutes predicted that Germany would see gross domestic product growth rise to 1.8 percent next year, following the 0.4-percent figure for 2013.

The latest outlook for this year was down from an earlier forecast of 0.8 percent.

"The German economy is facing an upturn. It will be carried by domestic demand," said a joint statement by the Ifo institute in Munich, DIW in Berlin, IW in Halle and RWI in Essen.

The figures are largely in line with forecasts by the German government, which has predicted 0.5-percent growth for 2013 and 1.6 percent for 2014, and the International Monetary Fund.

The IMF said recently growth in Europe's top economy this year will amount to 0.5 percent and reach 1.5 percent next year.

Looking ahead to 2014, the German institutes said they saw a marked upswing from 2013, although they revised their growth forecast down slightly from 1.9 percent announced in April.

Investment is being stimulated by an improving world economic climate and less uncertainty, they said.

"Growing employment and marked pay increases have already provided for a robust development in private consumption for quite some time," they added.

Germany has managed to avoid the recession encountered by many countries as the eurozone's sovereign debt crisis developed.

But economic growth nevertheless slowed to just 0.7 percent in 2012 from 3.0 percent in 2011.

© 2013 AFP

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