German economy forecast to be strong

According to the IWF the German economy is doing very well. It is forecast to grow by two percent in 2006, whereas the global figure will be 5.1 percent. In the spring of this year the IWF experts expected just 1.3 percent of growth for Germany. Thus, following the latest forecast Germany is now the shooting star among the industrialized countries for which the forecast had to be corrected to the better most significantly.

“The German economy is thriving”, revelled Mr. Raghuram Rajan, the IWF´s chief economist, at the presentation of the corrected forecast data in Singapur. But he also recommended further reforms to the Germans, e.g. with regard to the labour market and corporate taxation. For next year he expects the economy to slow down due to an increased VAT.

The European economy is forecast to grow by 2.4 percent this year with a growth rate of 2 percent expected for next year. Interest rates are expected to rise.

Emerging economies and in particular that of China are seen to continue at their current enormous growth rates. The USA, however, will have to put up with a less promising economic future according to the IWF. Even though the IWF maintain their forecast of 3.4 percent for the 2006 growth rate, it was lowered from 3.3 to 2.9 for next year. Especially a weak real-estate market is said to slow down the US economy.

According to the IWF the oil price is set to grow once again strongly in the current year, on average from 53.35 US dollar per barrel to 69.2 dollars. The average price expected for next year is even 75.50 US dollars. GERMAN