Happy Germans

The Growth Machine is Back

happy germans_3-AnzenbergerAgency
Germans are spending money and living life.
  • Why it matters

    Why it matters

    The German institutes are the latest group to suggest that Germany’s economy can expect a good few years on the back of the European Central Bank’s easy money policies.

  • Facts

    Facts

    • Germany’s leading private institutes now expect the German economy to grow 2.1 percent this year, compared to a forecast of just 1.3 percent in October.
    • The institutes see domestic consumption rising 3 percent this year.
    • Exports should increase 5.9 percent and the country’s trade surplus rise to 8.5 percent of economic output.
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    Audio

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It’s a been remarkable turnaround in the shortest of periods. Back in October, there was talk that Germany might face a recession. The summer had been unkind, and economists in Germany spoke of a “stagnating” economy.

Instead, it now looks like Europe’s largest economy can expect nothing but good news in the coming years. Consumers can expect more money in their pockets, the result of rising wages and low inflation, while the government can expect its coffers to overflow with fresh tax proceeds.

This suddenly rosy outlook seems to be the message from the latest forecasts by a group of Germany’s top private economic institutes, which twice a year issue a joint report on the economy at the request of the government in Berlin.

While much of Europe still remains in crisis, with Greece flirting with an exit from the 19-nation euro zone and major economies like France and Italy struggling to improve the competitiveness of their businesses, Germany’s powerhouse economy seems to be rolling on as if immune to the problems of its neighbors.

For 2015, the institutes on Thursday said they expect Germany’s economy to grow at 2.1 percent. That would mark the fastest growth rate in four years and would outpace any other major economy in the euro zone. Of the major European economies, only Britain can expect to see stronger growth this year.

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