Spring forecasts in Germany

According to the press release of Ministry of Economy of Germany the German Federal Government has predicted a reduction of real GDP by an average of 6%, in its spring forecasts for the current year and expects its growth by 0.5% in 2010.

“The economic recession, which is expected in the current year, for the most part, is a consequence of massive disruption in the global economy and the consequent drastic reduction in our exports,” – quotes a leading paper from the speech of Minister of Economics and Technology of Germany Karl-Theodor zu Gutenberg at the meeting of the Cabinet of Ministers.

According to him, the two existing government programs to improve conditions allow Germany in a national scale “to survive better” compared with other countries. In this regard, zu Gutenberg sees no benefit in taking the third market program, as called for by some politicians and experts.


“Anyone who believes that we must “add” a third program will get just the opposite effect: undermining the confidence of investors, consumers and taxpayers. Waiting and frustration – this is the last thing our country needs “, – stressed the Minister.

He said that the further stabilization of the banking and financial sector was the main problem in the process of solving the issue of returning the German economy on a course of stable growth.

“So I think that the primary purpose of developing a rapid and effective solution is the isolation of “toxic securities” on bank balance sheets” – said the head of the Ministry of Economy of Germany.

He also expects further decline of exports this year, but also predicts, that the global economy recovery will stabilize in this sector in 2010.

Almost the same predictions, according to experts in the ministry, can be attributed to the construction investment. “The government market program has a direct supporting influence on it,” – it is said in the press release.


Less encouraging forecast is given in the paper for the field of employment: “In the current year, unemployment will increase by an average of 450 thousand and will reach the level of 3.7 million people, and next year it will increase approximately by 900 thousand and will be 4.6 million people.”

The Minister called personal consumption an important stabilizing factor, which in this period will be exposed to only a very slight decline due to short-term program of government (in particular, reduction of tax on incomes of citizens, reduction of the size of mandatory contributions to health insurance, payment of benefits to children and increase of pensions).

Wide economic benchmarks of the spring forecast, as noted in a press release, will be the basis for the planned evaluation of tax revenues, as well as for meetings in the Council of financial planning, in regard with federal budget, land, communities, and contributions to social insurance.

Spring forecasts in Germany