BDI Economic Report

10/25/2010

The German economy is working its way out of the crisis with remarkable speed and vigour.

Manufacturing exports are the driver, which continue to benefit from favourable global economic conditions. Domestic demand has been boosted in turn, in many cases more than making up for the effect of expiring economic stimulus programmes. Capital expenditure has picked up, and consumer spending is contributing to growth too thanks to unexpectedly low post-crisis unemployment. This macroeconomic environment has allowed the German economy to grow significantly faster than the rest of Europe. Even in the unlikely event of a stagnation setting in the second half of 2010, GDP growth would still end up 2.8% higher year-on-year. On the basis of current economic data the BDI believes growth will come in at around 3.5%.

Though the global economy is showing signs of slowing, this type of scenario would have been scarcely imaginable just one year ago. This same applies regarding the risks jeopardising the recovery. Overheating tendencies in certain emerging markets, low growth in the US, financing problems and exploding budgets are definitely a hindrance to economic expansion, but these are known factors now seen as manageable. The most likely scenario is thus for a slower recovery as opposed to a renewed drifting into recession.