Germany Raises Economic Forecast

The German government raised its growth forecast, predicting that Europe’s largest economy will grow by 1.2% in 2010, up from an earlier prediction of 0.5%, Manufacturing.Net reports. The new forecast was also more optimistic about this year, predicting their economy will shrink by 5% instead of the 6% forecast in April.

The German government forecast that the number of Germans out of work will average 3.5 million this year, and increase to 4.1 million next year. That compares with 3.3 million in 2008. Unemployment has been kept in check so far by employers’ use of government-supported short-time working arrangements rather than layoffs. In September, nearly 3.35 million people were registered as unemployed, a jobless rate of 8%.

German exports are expected to slump by 14.6% this year and then growing by 4.3% in 2010. In April, the government had predicted an 18.8% decline in 2009 and slim growth of 0.9% next year.

Domestic demand will shrink by 1.8% this year and expand by a modest 0.6% in 2010, the new forecast said.

This year’s economic performance is still on course to be easily Germany’s worst since World War II, despite the upward revision. The worst performance to date was a 0.9% decline in West Germany’s gross domestic product in 1975. The worst since German reunification was a 0.8% fall in 1993.