FRANKFURT (MNI) – Germany’s economic recovery should not be
hampered by the expiry of stimulus programs, as domestic activity
increasingly supports the export-led recovery, the Bundesbank said in
its Monthly Bulletin releases Thursday.
Nevertheless, foreign demand will continue to determine Germany’s
fortunes since the export sector is providing the basis for the
favourable developments in the labor market, stimulating private
consumption, as well as for growing investment, the German central bank
said.
“The upward trend of the German economy appears to be relatively
solid,” the report said.
The ongoing recovery of the labor market and rising income
perspectives should support private consumption while favorable
financing conditions have given housing construction a significant
boost, the central bank said.
At the same time, “a growing number of companies have brought
capacity utilization back to normal levels, making new investments more
pressing,” the Bundesbank said.
“The German economy should thus be able to handle the gradual
expiry of fiscal stimuli programs without losing much steam,” the report
said.
“The condition for this remains that the expectations regarding
global economic developments in general and exports in particular
materialize, because they form the basis for favorable labor market
developments, better income perspectives and expansive investment
plans,” the Bundesbank said.
Until now, the Bundesbank observed, private sector export
expectations have remained “very optimistic.”
The Bundesbank also the reiterated its assessment that still-weak
credit developments in Germany are not a symptom of a credit crunch.
“The latest results of the bank lending survey also argue against banks
holding back Germany’s recovery,” the report said.
–Frankfurt bureau; +49-69-720142, jtreeck@marketnews.com
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