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Bundesbank optimism

June 8, 2012

Germany’s central bank has revised upwards its forecast for growth in Europe’s biggest economy. It assumes that the country will remain in relatively good shape, despite the raging eurozone debt crisis.

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Engineeer inspecting a manufacturing device
Image: picture-alliance/dpa

The German central bank on Friday upgraded its growth predictions for Europe's number-one economic powerhouse. It acknowledged that the debt crisis in the 17-member euro area had left its mark, but maintained that Germany would be able to stay in good shape for the rest of the year and beyond.

In its latest monthly report, the Bundesbank raised its forecast for gross domestic product (GDP) growth this year to 1.0 percent from 0.6 percent previously. But it trimmed its 2013 forecast to 1.6 percent from 1.8 percent.

"Following a temporary phase of weakness, the German economy has regained momentum," Bundesbank Chief Jens Weidmann said in a statement.

Shaky environment

"The adjustment recession in some eurozone countries and the loss in confidence resulting from the sovereign debt crisis have left their mark, but the German economy's structural soundness and the robustness of the global economy have retained the upper hand," Weidmann added.

While being upbeat about Germany's growth prospects, the central bank spoke of "an extraordinary measure of market uncertainties and risks" in the eurozone, mentioning in particular the unstable political situation in Greece and the banking dilemma in Spain.

The Bundesbank believes nonetheless that unemployment in Germany will go down further to total 2.8 million people this year or 6.7 percent. It also reckons with an inflation rate in the country of 2.1 percent this year and 1.6 percent in 2013.

hg/ gb (dpa, AFP, Reuters)