Germany may be showing the first signs of pulling out of the worst economic recession since World War II, the country’s Finance Ministry said, citing key indicators in the second quarter.
The pace of economic contraction is probably slowing in the three months to June, helped by stimulus programs that are stabilizing domestic demand, the ministry said yesterday in its report for this month.
Germany’s economy “is likely to remain weak for some time,” the report said. “Still, there are signs that the contraction of the economy may slow in the second quarter.”
The German economy may shrink by 6 percent this year, the government has forecast.
The economy, Europe’s largest, contracted by 3.8 percent in the first quarter, the most since data were first compiled in 1970, as exports that account for about a third of economic growth plummeted on the global crisis.
The contraction may slow to 0.5 percent in the second quarter, the Berlin-based DIW economic institute forecast on Monday.
Consumer prices will continue to remain calm in coming months, easing the recession.
Temporary deflation may also set in this year, the ministry’s forecasters said.
Yesterday the Federal Statistics Office reported that producer prices fell at the fastest rate in almost 22 years last month as energy costs declined and demand weakened.
Prices fell 2.7 percent from a year earlier after dropping by an annual 0.5 percent in March, the office in Wiesbaden said.
That’s the biggest drop since June 1987 and exceeded economists’ forecast for 1.3 percent decline.
“We see disinflation continuing throughout the summer in response to the development of oil prices,” Mario Gruppe, an economist at NordLB in Hannover, Germany, said in a telephone interview. “At the end of the summer, producer prices will start to increase again, as will consumer prices.”
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