FRANKFURT (MNI) – The German economy should expand by 3.1% in real
terms this year and 1.8% next year, the Bundesbank forecast Friday.
“Consumer prices are likely to rise fairly sharply, mainly owing to
much higher energy prices but also as a result of increasing overall
capacity utilization,” the German central bank said, predicting an
average CPI rise of 2.5% this year and 1.8% in 2012.
“The rate of wage increase is accelerating, but remains compatible
with macroeconomic stability,” it said.
The economic recovery has evolved into a “broad-based upturn,” it
said, noting that production capacity utilization has now returned to
normal levels. Residential construction and private consumption are
picking up as well.
Employment should continue to expand over the next two years,
reducing unemployment to “well below” three million and the jobless rate
to 6.5% by next year.
Downside risks stem from uncertainties in the financial markets due
to the “fragile position” of public finances in a number of industrial
countries, it noted.
“The prospects of the German economy experiencing a lengthy period
of expansion are therefore rising,” the central bank said. “This should
considerably facilitate the urgently needed consolidation of public
budgets.”
[TOPICS: M$G$$$,M$$EC$,M$X$$$,MT$$$$]