The German government on Wednesday raised its 2014 growth forecast from 1.6 per cent to 1.7 per cent as prospects for the nation’s key export markets rebound and domestic demand strengthens.
“The economic momentum will accelerate significantly next year,” said German Economics Minister Philipp Roesler releasing the new economic forecasts.
The government sees the current positive sentiment in business and a pickup in consumer spending as the key pillars of growth for Europe’s biggest economy in the coming year.
“Employment and income will continue to grow significantly while consumer spending will increase,” said Roesler.
While domestic demand is forecast to grow by 1.9 per cent next year after 0.8 per cent this year, household spending will expand by 1.8 per cent in 2014 — up from 1.6 per cent this year.
The economy is expected to grow by 0.5 per cent in 2013, in line with the government’s April forecast, after it expanded by 0.7 per cent in 2012.
But the government’s report also warns: “The global economic environment is still fragile.
“The growth expectations for major German markets, especially in emerging markets are subdued, but brightening,” the report said.
As a result, exports are projected to grow by 3.8 per cent next year after expanding by just 0.3 per cent this year. Imports are set to rise from 1.1 per cent last year to 4.5 per cent in 2014.
Corporate investment in capital and equipment is also projected to rebound from a 0.3—per cent contraction this year to grow by 4.3 per cent in 2014. Investment shrunk by 2.1 per cent in 2012.
The numbers out of work are forecast at 2.9 million for this year and next.