Economic forecast 2013/2014

The drop in gross domestic product by no less than 0.6 percent at the end of 2012 has impaired the economic picture at the start of 2013. In the fourth quarter of 2012 gross domestic product was 0.3 percent below the 2012 annual average. This “underhang” means that, even if the economy does pick up strongly in the course of this year, annual average growth will be only modest.

There are now clear signs that the economy is gathering speed. Industrial business expectations are substantially more upbeat than a few months ago. The assessment of the current situation – more of a lagging indicator – has already perked up slightly. Having fallen in January, new orders rose appreciably in February, industrial production was more or less in line with its fourth quarter 2012 level. The rundown of involuntary inventories now seems to be over. The retail sector got off to an extremely good start to the year, with real sales in January and February 2.3 percent up on the fourth quarter average. “All in all, we believe that the German economy already grew again slightly in the first quarter 2013. We have taken into account that construction activity took a stronger hit than normal from the exceptionally severe winter. But the shortfalls will be made up again in the second and third quarters, providing an additional lift to growth,” said Michael Heise, chief economist of Allianz.


All told, the economists at Allianz estimate that the German economy will grow by a good 2 percent in the course of 2013, giving annual average gross domestic product growth of 1.0 percent. “Provided there are no extreme shocks, we see no reasons why the upswing should not continue in 2014 as well: Monetary policy remains expansionary overall, the pressure to consolidate in key partner countries is starting to ease, and there is still potential on the domestic demand front. For 2014 we are forecasting economic growth of 2.1 percent,” said Heise.

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