Germany can expect only modest and patchy growth in 2010, forcing firms to cut capacity and shed workers, the German commercial banks association (BdB) said on Thursday. The economy has shown signs of recovery after it pulled out of recession in the second quarter, the BdB said in a report, but this year's likely 5 percent slump in gross domestic product will have a lingering impact.
The weakness threatens to push unemployment in Europe's largest economy up to an average 4.3 million next year, even though growth should gain momentum in the third-quarter, the BdB added. Forward looking indicators suggest the economy will continue to grow in the immediate term, and so far unemployment has defied forecasts, falling for a third consecutive month in September as statistical changes and government measures cushioned the labour market.
But the head of the BdB, Manfred Weber, said that without a large increase in production to boost capacity utilisation, firms would have to shed workers. "The unexpectedly strong recovery spurt will carry us to the end of the year. But this recovery will not continue in a straight trajectory next year," he said, adding that Germany could expect modest growth in 2010 and that it would not slip back into recession.
In September, the headline unemployment figure that carries political significance in Germany - the unadjusted jobless total - stood at 3.346 million. The Federal Labour Office's IAB economic research institute foreast earlier this month that joblessness would rise in the months ahead and average 4.1 million in 2010.
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