FRANKFURT (MNI) – The Eurozone economy should emerge from recession
in the first half of this year, though the ongoing debt crisis and high
commodity prices remain headwinds, Bundesbank board member Andreas
Dombret said Tuesday.
After a soft patch this winter, the German economy is recovering
and is now in pretty good shape, he said.
Speaking to journalists here ahead of the spring meetings of the
IMF and the World Bank, Dombret said the German central bank shares the
assessment of the IMF that risks for the international economy have
diminished in recent months.
The two institutions have similar scenarios for the German economy
over the medium term, he noted. The IMF expects GDP growth of 0.6% this
year and 1.5% next year, while the Bundesbank’s growth forecasts from
December are for 0.8% and 1.9%, respectively (all workday-adjusted).
Record-low unemployment in Germany and high capacity utilization
imply certain risks for domestic inflation, he conceded. While the IMF
sees average inflation below 2% this year, the Bundesbank fears the rate
could be higher, he said.
Given its dependence on exports, Germany favors the positive
development of its trading partners and the stabilizing role the IMF can
play in the global economy, Dombret said.
Germany is willing to contribute up to E41.5 billion to strengthen
the resources of the IMF, provided other members do their part and there
is a fair distribution of the financial burden, he said.
At the same time, the IMF must aim to reduce the risks it faces
through its own surveillance and by imposing strict conditions for
domestic structural reforms in exchange for the financial aid it
provides to countries in need, Dombret stressed.
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