PARIS (MNI) – The German economy is facing a period of slower
growth because of a weaker pace of world trade and a loss of business
confidence tied to the European debt crisis, the Organization for
Economic Cooperation and Development said on Monday.
The organization forecast that German GDP would expand by 0.6% in
2012 and 1.9% in 2013
Germany could recover faster than its European partners from the
slowdown because of lower levels of debt at the government, corporate
and household levels, it said.
“Growth rates may then rise above potential from around mid-2012,
given the absence of underlying imbalances in household and corporate
balance sheets and only moderate fiscal consolidation needs,” the report
said.
Unemployment is also expected to remain near historic lows, the
OECD said, helping to support consumer confidence.
One potential problem for the German economy is a deterioration in
the balance sheets of German banks due to the debt crisis. Such balance
sheet problems “could lead to sustained problems in credit availability
which would adversely affect the outlook,” the OECD said.
–Paris bureau: +3314271-5540; jduffy@marketnews.com
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