OREANDA-NEWS. December 7, 2012. The German economy will be weak in the winter half-year, but it will revive in spring 2013. Therefore, in the current Economic Compass KfW has corrected its forecast downwards for price and calendar adjusted GDP growth to 0.9 % in the year 2013. In August it had projected real growth of 1.5% for 2013. In contrast, KfW confirms its forecast of 1.0% for 2012. The outlook for the final quarter 2012 (-0.2% compared to the previous quarter) and for the first quarter 2013 (stagnation) is bleak. The poor economic development in southern Europe is largely responsible for the weak winter half-year. It creates uncertainty among enterprises and curbs their willingness to invest.

"Growth in 2012 is mostly due to private households. Job security and consumption go hand in hand. The low interest rates and highly volatile financial markets drive savings into real estate and stimulate housing construction," said Jorg Zeuner, Chief Economist of KfW Bankengruppe.

The drop in government investments after the end of the stimulus package reduced growth this year by about 0.2 percentage points. The relatively high impact on growth from net exports (about one percentage point) masked the declining export dynamics. We expect export growth to decline by about half compared to 2011. But the large reduction in inventory decreased the dynamic in import demand in 2012 to such an extent that this is not noticeable in the overall picture. However, in the long term declining corporate investments cause the most concern.

In the coming year southern Europe will continue to feel the effects of the recession. The impact of net exports on growth is likely to drop to zero. "Hope again rests on private households," explained Dr Zeuner. This is valid as the situation on the labour market is robust and the historically high employment figures will more or less remain unchanged. Strongly rising wages combined with a consistently low inflation rate present favourable preconditions for a noticeable growth in consumption in the coming year. Housing construction will also remain attractive in 2013.

The forecast for the second half of the year is more optimistic. "German enterprises remain competitive," continued Dr Zeuner. "In addition, the US labour and real estate markets offer hope for solid growth in North America, which will send positive signals to the global economy and financial markets. This will put slight pressure on the Euro, which combined with the global recovery will stimulate our exports. Therefore the German economy will overcome the current weak period relatively quickly. Starting from spring 2013, quarterly growth rates of 0.5 % or higher will again be possible. In short: "Germany will pass the economic test," stated Dr Zeuner.