German government expects economic upswing to continue

Yesterday the final consultations on the ā€˛Macroeconomic Projections« by the German government took place. At the end of these consultations the government presented the latest economic figures expected for the years 2007 and 2008. For the year 2007 the Federal government expects GDP to grow by 2.4% in real terms. For 2008 it expects the economy to grow by 2.0% in real terms.

Particularly pleasant, according to the Federal Ministry of Economics, is the fact that the situation on the labour market is more and more improving. The German government expects that the number of employees will increase by 660.000 people on an annual average in 2007. For 2008 this number is predicted to increase by another 300.000 additional employees. The number of jobless people would thus fall by 700.000 people in 2007 and by another 295.000 next year to 3.5 million jobless people.

In 2007 already, economic growth is mostly sustained by domestic demand. Next year the global drive will somewhat slow down so that growth will be mainly determined by the domestic economic development, presume the experts. Due to the very high capacity utilization companies will presumably invest quite a lot in 2007 and 2008. In 2008 it will possibly be private households which will drive the economy. After having been rather weak over the past years private consumption will significantly increase in 2008. This opinion of the German government is also shared by economic research institutes. GERMAN