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Germany raises 2010 economic forecast while inflation wanes

Updated:2010-01-28 14:46:04

Germany's economy will rise 1.4 percent in 2010, a little faster than previous estimates, as exports tend to rebound, but private consumption is still to be fragile, the economy ministry said Wednesday.

In the newly released outlook of 2010, the German government predicted that the overall economy would jump 1.4 percent this year, compared with 1.2 percent growth estimated in October.

"We've made a cautiously optimistic forecast," Economy Minister Rainer Bruederle said at a press conference. "All in all, Germany has pulled through the worst economic crisis since the war quite well."

Exports, the main engine of the German economy, were expected to surge 5.1 percent after last year's 14.7 percent plunge, while imports would climb 3.4 percent, compared with a 14.7-percent contraction in 2009.

The ministry forecast that gross investment in equipment would increase 3.1 percent this year after plummeting 20 percent last year due to wide-raging international financial crisis.

Germany, the biggest European economy, recorded a five percent shrink in 2009, the largest recession since World War II. As Merkel's government was spending 85 billion euros (119 billion U.S. dollars) to stimulate the domestic market and pushing forward a 24- million-euro tax cut, the economy showed signs of slow recovery since the second half of last year.

"We have passed the trough, but the climb will be slow and arduous," Bruederle said. Uncertainties remained in the way of economic upswing.

The report said private consumption would fall 0.5 percent this year after a slight rise of 0.4 percent. The growth pace would be hindered due to such a low inflation rate.

Germany's unemployment rate will average 8.9 percent this year, up from 8.2 percent in 2009, meaning that about 3.77 million people would lose their jobs, the ministry said.

Moreover, the government is faced with a mountain of debt and expects a record 85.8 billion euros (120.7 billion U.S. dollars) in new borrowing this year.

Data released recently showed that German business confidence rose for a 10th consecutive month in January, while investor confidence fell for a fourth straight month with fears of unemployment pushing down private spending.

"Uncertainty about the further course of the economy is high," Bruederle told reporters. "We expect positive impulses this year mainly from a recovery of the global economy."

 

 

Source:http://news.xinhuanet.com

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