Bundesbank: German economy set to grow
GERMANY’S economic outlook is improving despite the Eurozone crisis and the country’s economic contraction in the final quarter of 2011, the Bundesbank reported yesterday.
The national central bank described the country’s current problems as “temporary sluggishness”, arguing that business and consumer surveys pointed to a stable or positive picture.
“This more positive environment should remain in place provided that the sovereign debt crisis in Europe and the situation on the oil markets do not deteriorate,” the report said.
Loose monetary policy in industrial nations and the prospect of loosening in emerging markets is propping up the economy, meaning “some of the current forecasts by international organisations look overly pessimistic”.
The report should cheer German Chancellor Angela Merkel, as wage growth and “the perceived low risk of redundancy” have combined with the low cost of financing to boost the country’s construction sector.
The report said the impact of the Eurozone crisis was not just being felt through lower exports but also higher immigration from Greece, Italy, Spain and Portugal. They accounted for around 10 per cent of net immigration in the final quarter of 2011, when it was roughly balanced in 2010.
However, the Bundesbank did have one word of warning for Merkel – her “fiscal consolidation aims therefore appear very unambitious”, it said, arguing against any relaxation in Germany’s deficit reduction plan.