Government lowers 2013 economic forecast to one percent

Government lowers 2013 economic forecast to one percent

According to government sources, the number of unemployed is expected to remain below the three million mark in both years. Surprisingly, the confidence of financial professionals surveyed by the mannheim ZEW in the german economy has increased.

Economy minister philipp rosler (FDP) will present the economic forecast of the black-yellow coalition this wednesday in berlin. "We still have growth, but much more subdued than expected," said government circles in berlin, confirming information from several newspapers on tuesday. For this year, the experts expect a plus of 0.8 percent, which is 0.1 percentage points more than predicted in the spring.

Last week, the leading research institutes had already revised their forecasts significantly downward to exactly the figures now expected by the government – growth of only 0.8 percent for 2012 and 1.0 percent for 2013. With this, they had halved their expectations for 2013. Last year, the german economy had still grown by three percent.

The assessment of the labor market, which is expected to remain stable, is also unanimous. According to the federal government’s forecast, the number of unemployed is expected to fall by an average of around 86,000 in 2012 and rise again slightly by 30,000 in 2013. Government expects average unemployment of 2.9 million in both years.

Rosler said in an interview with the news agency dpa: "economic development will become more difficult. And that is why we are well advised to do everything possible in the future to further strengthen our competitiveness."German chancellor angela merkel (CDU) had recently stated that she was counting on a strengthening of the domestic market in view of the dampened growth prospects.

Rosler stressed, however, that there can be no talk of a recession. "We are still talking about growth."But he concedes: "when 60 percent of our exports go to europe and 40 percent to the euro states alone, it is clear that the debt crisis cannot pass us by without leaving a trace, nor can the global economic slowdown."In the dpa interview, however, the economy minister also highlighted the risks: "further development depends not only on us, but also very much on developments in the euro zone."

Positive signals came from the ZEW index for future economic development. In october, the indicator rose by 6.7 points to minus 11.5, according to the centre for european economic research (ZEW) in mannheim, germany. The indicator, which is based on a survey of 350 financial experts, thus rose for the second time in a row and also more strongly than economists had expected. The indicator was last higher in may (plus 10.8). The ZEW sees one reason for the increased confidence in the fact that the uncertainty on the financial markets has decreased in the past weeks.

Overall, more experts still expect the economy to worsen than to improve. By contrast, the assessment of germany’s current economic situation was less favorable than in the previous month. This indicator fell by 2.6 points to plus 10.0 payer. Economists had expected a somewhat weaker decline to plus 11.8 in the run-up to the event.

However, consumer sentiment is sinking rapidly. According to a representative study by the gfk in nurnberg, european consumers do not expect the economy to recover quickly. "It also plays a role that very many countries in the euro area have to undertake very strong consolidation efforts," the market research company’s consumer expert, rolf burkl, told the dpa in nurnberg. The czechs, portuguese and spaniards were particularly concerned about the future, while the germans, romans and brits were the most confident.

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