Bundesbank: German economy slowly picking up again

07 June 2013

The outlook for the German economy has become brighter again following the slowdown towards the end of 2012. Nevertheless, the Bundesbank sees continuing structural problems as standing in the way of a rapid improvement.

The Bundesbank, in its projection, expects a 0.3 per cent increase in price-adjusted gross domestic product (GDP) in 2013 (0.4 per cent after adjustment for calendar effects), and then a 1.5 per cent increase in real GDP (likewise 1.5 per cent after calendar adjustment) next year. This would mean that there would be a healthy level of aggregate capacity utilisation again, with the labour market bolstered by economic activity and, given the currently planned fiscal policy course, a balanced general government budget.

"Much will depend on whether the economic situation stabilises in the euro area crisis countries and whether expansionary forces will gradually gain the upper hand there", explained Mr Weidmann, who also warned that a slackening of consolidation and reform efforts might destroy confidence again, which would then also negatively affect the financial markets. As Mr Weidmann stressed, "A sustained upturn in the world economy is just as important as a precondition for the growth path we have assumed".

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