Germany’s recovery will likely continue in the second half of the year although at a slower pace as foreign demand decelerates, the Finance Ministry said in its monthly report yesterday.
Europe’s largest economy last week posted growth of 2.2 percent in the second quarter — the fastest expansion since reunification — smashing expectations.
The government will therefore have to considerably modify its official forecast for full year growth, which currently stands at 1.4 percent, the ministry said.
The Bundesbank said on Thursday that Germany would see growth of some 3 percent this year, up from the 2 percent it forecast in June, bringing the central bank broadly into line with market expectations.
“Monthly economic indicators point to the German economy’s positive start to the third quarter,” the ministry said.
It added that the upswing was broadening, with private consumption and investments contributing to growth as well as exports. “Yet economic momentum will likely be considerably less strong in the second half of the year than in the first.”
The ministry said the continued recovery in the labor market would likely further boost private consumption. German unemployment fell last month to its lowest level since November 2008, declining for the 13th consecutive month.
However, the stimulus foreign demand provided to the German economy could well ease slightly in the second half of the year, the ministry said.
The tax take from Germany’s federal government and states looks likely to be better than expected. Although it fell 0.9 percent between January and last month compared to the same period a year earlier, a panel of tax experts had predicted tax take would fall 2.6 percent for the whole year.
Revenue from the corporate tax paid by big companies rose 25.6 percent from January to last month.
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