Germany To Avoid Recession & Return To Growth: Bundesbank

Europe’s largest economy, Germany, will return to growth in the first quarter of 2013, predicted the Bundesbank on Monday, alleviating fears of a technical recession, after its GDP contracted by 0.6 percent in the last quarter of 2012.

The Bundesbank’s monthly report for February forecasted that the rest of 2013 would see a gradual pick-up in economic activity for Germany; though severe recessions in other euro member countries may continue to dampen regional growth, it said.

Europe’s largest economy, Germany, will return to growth in the first quarter of 2013, predicted the Bundesbank on Monday, alleviating fears of a technical recession, after its GDP contracted by 0.6 percent in the last quarter of 2012.

The Bundesbank’s monthly report for February forecasted that the rest of 2013 would see a gradual pick-up in economic activity for Germany; though severe recessions in other euro member countries may continue to dampen regional growth, it said.

Nonetheless, German consumers and industries were seen as key to the recovery of the region, especially with business and investor confidence improving last month, while unemployment rates unexpectedly dropped.

[quote]“The economic outlook for Germany has improved relatively quickly and in remarkable fashion in the past three months,” the German central bank said. “For the rest of this year, the economy is expected to pick up gradually, even if the external economic environment will provide no trigger for a sharp surge in demand.”[/quote]

Prior to its February forecast, Germany’s central bank had lowered its 2013 growth forecast, last December, to just 0.4 percent. According to official figure, the economy slowed throughout 2012, starting from 0.5% growth in the first quarter, to 0.3% and 0.2% in the second and third quarter and shrinking by 0.6 percent in the last quarter.

If the economy had shrunk again in the current quarter, Germany would technically be in recession, defined as two quarters of contraction.

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“As it currently looks, a plus in economic output can be expected in the first quarter of this year,” the Bundesbank said, echoing comments made by economic minister, Philipp Rösler last week.

The German Federation of Chambers of Commerce (DIHK) was even more upbeat, projecting GDP growth to climb to 0.7 percent this year.

In contrast, the European Central Bank recently forecasted that the eurozone will shrink by 0.3 percent in 2013, and only start to recover later in the year.

Earlier, Bundesbank board member Andreas Dombret said the ECB must ensure that its crisis-fighting measures do not distort financial markets and give rise to new crises.

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