–Correcting 2011 Growth Fcast Erroneously Reported As 1.8%
–Economy Minister Roesler: Expect Flat GDP In Q4
BERLIN (MNI) – The German government has raised its GDP forecast
for this year to +2.9% from +2.6% but cut its projection for next year
to 1.0% from +1.8%, Economics Minister Philipp Roesler has said.
The revised growth forecasts will form the basis for the
government’s public finances projections due next month.
Over the medium term, the government expects annual average GDP
growth of 1.7% until 2016, Roesler said. The potential growth rate is
seen at 1.4%, he added.
For the fourth quarter of this year the government expects flat
growth, but doesn’t expect a recession, the minister added.
Unemployment should decline further, he said. The government
projects an unemployment rate of 7% this year and 6.7% next year.
“The annual average unemployment rate will stay this year below the
three-million-level,” Roesler said. “Employment will increase both this
year and next year.”
Domestic demand will increasingly become the main pillar of
economic growth, the minister explained. Disposable income of private
households is seen rising by 3.2% this year and 2.9% next year.
Inflation is projected at 2.3% and 1.8%, respectively.
Federal net new borrowing this year is expected to come in
“significantly below E30 billion,” Finance Minister Wolfgang Schaeuble
said, speaking at the same press conference.
Schaeuble announced that the government aims to cut income taxes by
some E6 billion to E7 billion in 2013 “to support the good economic
situation.” Both Schaeuble and Roesler said they expected to overcome
resistance against tax cuts in the opposition-controlled upper house of
parliament, the Bundesrat representing the 16 states.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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