Merkel more optimistic on German growth this year

16th September 2011, Comments 0 comments

The German government could raise its official 2011 growth forecast after Chancellor Angela Merkel indicated Friday Europe's biggest economy would expand faster than expected this year.

"Growth this year should be closer to three percent than 2.5 percent," she told a trade association in Berlin, despite mounting concern that Germany, which is heavily dependent on exports, could be facing a slowdown.

Merkel's comments suggest that the government -- which has so far been pencilling in gross domestic product (GDP) growth of 2.6 percent -- may raise its official 2011 forecast when it is announced at the end of October.

Indeed, economists and business leaders have all been much more optimistic all summer, suggesting growth could actually come out at 3.0 percent or even higher.

Nevertheless, the ongoing eurozone debt crisis could pour cold water on such optimism, with the European Central Bank and the EU Commission both downgrading their economic forecasts for the single currency area recently.

And German growth, too, failed to meet expectations in the second quarter, coming out at a meagre 0.1 percent.

One top think-tank, the IfW in Kiel, even suggested Germany was "on the edge of a recession", predicting growth would slow from an anticipated 2.8 percent this year to just 0.8 percent next year.

© 2011 AFP

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