Germany on ‘normal, steady growth’
Print Edition
The Bundesbank forecast yesterday that the German economy, Europe’s biggest, will return to “normal, steady growth” in the second half of 2013, but sounded cautious about investment.
“In the second half of 2013, economic growth in Germany is likely to return to normal and steady rates,” the German central bank wrote in its August monthly report.
Last week, official statistics showed that German gross domestic product expanded by a stronger-than-expected 0.7 percent in the second quarter following zero growth in the first quarter.
The data showed growth was driven mainly by domestic demand, with consumer spending and public expenditure both on the rise and investment was also up on the previous quarter.
But in its report, the Bundesbank was doubtful whether there would be a noticeable revival in investment.
Additional demand for German companies’ products was largely coming from non-eurozone countries “where firms are tending to expand their production capacities.”
“This is curtailing fixed capital formation at domestic production sites and the growth of exports to third countries,” the Bundesbank said.
Companies’ investment in machinery and equipment, which had stabilized at a low level at the beginning of 2013 following a significant fall in 2012, “gathered little momentum in the spring despite the sharp increase in economic output,” it said.
And capital formation in the domestic corporate sector also remained largely subdued.
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