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.