Leading economic think tanks have slashed this year’s annual growth forecast for Germany by half, as uncertainty in the eurozone continues.
On Thursday, the Munich-based Ifo together with Berlin-based DIW, Halle-based IW, and Essen-based RWI economic research institutes estimated that Germany’s gross domestic product (GDP) would grow by 0.4 percent this year, which is down from an earlier prediction of 0.8 percent.
“The German economy is facing an upturn. It will be carried by domestic demand,” the four institutes said in a joint statement.
The figures largely correspond with forecasts by the German government, which has predicted the eurozone’s largest economy will grow by 0.5 percent in 2013 and 1.6 percent the following year.
The German institutes said they saw a marked upswing from 2013, and forecast the growth for 2014 to stand at 1.8 percent.
“Growing employment and marked pay increases have already provided for a robust development in private consumption for quite some time,” they said.
According to a report released by the German Federal Labor Office on October 1, the country’s unemployment level rose by 25,000 in seasonally adjusted terms last month, following a 9,000 rise in the previous month. This is while economists initially expected a drop of 5,000 claims.
German Chancellor Angela Merkel has insisted that the country is experiencing good economic performance as well as low unemployment rate.
This is while, the German powerhouse in electronics and electrical engineering, Siemens AG, is planning to axe 15,000 jobs over the next year as the economic crisis in Europe continues to worsen.
Europe plunged into financial crisis in early 2008. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.
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