German central bank sees 2.5% growth this year

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The German central bank said Tuesday that growth should be around 2.5 percent this year as domestic demand picks up alongside exports, the traditional driver of Europe's largest economy.

"We expect growth of around 2.5 percent this year," outgoing Bundesbank president Axel Weber said as he presented the bank's annual results in Frankfurt.

The German government has forecast growth of 2.3 percent for this year following a record expansion of 3.6 percent in 2010 after the country's worst post-war recession of 4.7 percent in 2009.

German goods such as machine tools used by Asian countries to produce consumer products have seen strong demand in a global economic rebound and luxury automobiles have also fared much better.

The recovery, however, has "quickly balanced out" to include domestic demand from households and businesses last year, Weber noted.

Inflation has picked up as well, meanwhile, and should reach around 2.0 percent this year, compared with 1.1 percent in 2010, before easing in 2012 unless strong wage increases come through, Weber said.

Weber steps down as head of the central bank at the end of April.

© 2011 AFP

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