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Germany — Economic growth expected to top Euro zone over next decade

24 August 2010

Whilst Germany bottomed the European League tables of economic growth rates for most of the last decade, the next decade could very well be characterised by Germany leading growth in the Euro Area, a new report by Dekra Bank reveals.

The author of the report, Andreas Scheuerle, said "whilst Germany will not become a growth champion like China, it is likely that she will head European growth rankings."


Germany is expected to grow by +3.5% this year, a much higher growth rate than in other Euro Area countries.

According to the research, there are various reasons for Germany's current economic success. Labour unit costs have risen far less than in other Euro Area countries over the last decade and German companies have strengthened their cash positions enormously, which puts them in a good stead in the times of credit crunch.

German companies have also very early discovered Eastern European growth markets, which combined with the booming BRIC countries (Brazil, Russia, India and China) account for much of German exports.

Dekra Bank, Chief Economist, Ulrich Kater, told German daily Die Welt "interest rates are likely to remain low because the European Central Bank will have to consider the problem countries of the Euro Area. This creates advantageous conditions for investment in Germany and for the increase in domestic consumption."

However, Chris Williamson from financial information firm Markit, warns that "growth in the Euro Area is increasingly reliant on growth in Germany and France. Growth in other Euro Area countries is more or less zero."

 

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