Germany's leading economic institutes have warned against a dent in growth in the country next year. They have attributed their revised expectations to the eurozone debt crisis and sluggish demand in other regions.
A group of leading German economic institutes on Thursday revised their expectations for economic growth in Germany in the current year as well as in 2013, saying they expected less growth than they had originally anticipated.
Presenting their annual Autumn Outlook, the experts said they now reckoned with 0.8 percent growth in Germany in 2012, down from 0.9 percent in their spring forecast. But while there was only a slight revision for this year, the institutes halved their estimates for 2013, saying domestic growth would only amount to 1.0 percent instead of the 2.0 percent predicted half a year ago.
"Economic expansion will remain subdued for some months to come, but will pick up again in 2013," the report said. It added that unemployment would also rise slightly next year, but would still stay below the psychologically important threshold of three million unemployed.
Change of policy demanded
The institute's cyclical forecast largely corresponded with expectations voiced by the German Economics Ministry earlier in the week. The ministry had noted that the German economy remained relatively robust and capable of warding off recession, but could not escape the long-term impact of other eurozone nations' protracted woes.
The head of the German public sector union, Frank Bsirske, warned, though, that other nations' troubles were now becoming Germany's own troubles.
"We've just watched fellow euro area countries sliding deeper into recession as a result of excessive savings measures," Bsirske said.
He claimed that it was now pivotal to implement a European-wide investment and growth program worth 2.6 billion euros ($3.34 billion) over the next decade. But he added there was no political will at present to break through what he called "the vicious circle of budget consolidation and recession."