BERLIN (MNI) – The economic panel of the German Banking Association
(BDB), consisting of the chief economists of the main private banks in
Germany, on Wednesday forecast that German GDP would grow 0.5% this year
and 1.5% next year.
The economists expect economic activity to remain muted in the
first quarter and to start gradually picking up by the second. “The main
growth pillar will be domestic demand,” said BDB board member
Hans-Joachim Massenberg.
The economists forecast private consumption to grow by 1.0% this
year and by 1.3% next year. Government consumption is tabled at 1.0%
both in 2012 and 2013.
Equipment investments are expected to grow by 1.8% this year and by
3.1% next year. Construction investment is seen expanding by 1.3% in
2012 and by 2.2% in 2013.
The labor market is seen improving further. The bank economists
expect annual average unemployment to fall by around 100,000 to 2.860
million this year and to 2.800 million next year.
The country’s public deficit is forecast to rise slightly to 1.1%
of GDP from 1.0% last year and to fall to 0.8% next year.
Despite the ample liquidity supply by the ECB, the economists do
not see any inflation risks for Germany and the Eurozone. They forecast
German inflation of 1.7% this year and 1.8% next year. Eurozone HICP
inflation is seen at 2.0% in 2012 and 1.7% in 2013.
“We believe that an interest rate hike before the end of 2013 is
not likely,” the economists said.
Under the assumption that the debt crisis in the Eurozone won’t
deteriorate, the economists forecast a euro foreign exchange rate of
around $1.25 at the end of this year and of $1.28 at the end of next
year.
Commenting on the private sector Greek debt swap agreement reached
on Tuesday, the economists said they expected a large participation rate
of banks in the deal.
–Berlin bureau: +49-30-22620580; email: twidder@marketnews.com
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