Research group: German GDP to rise 1.7 percent in 2010

German GDP to rise 1.7 percent in 2010

BERLIN — The German economy, Europe’s biggest, is likely to grow by 1.7 percent this year and 1.8 percent in 2011, the German Institute for Economic Research, or DIW, said in its forecast Wednesday.

The Berlin-based group said in its forecast that overall improvement in the global economy is boosting the recovery in Germany.

Yet institute president Klaus Zimmermann warned that Germany’s recovery would be “difficult,” in part due to the still-high levels of debt that remain in the wake of the global crisis.

Unlike in past economic recoveries, Germany’s export-oriented economy will grow only “below average,” Zimmermann said, noting that most German goods go mainly to other countries within Europe that have been slow to recover.

Although the biggest growing markets are in Asian and South America, they are not large enough to provide a balance.

“New growth centers like China don’t have enough impact to strongly boost the recovery in industrial countries,” said Christian Dreger from the DIW.

The institute said that Germany’s job market is improving and predicted an unemployment rate of 7.8 percent for this year and 7.7 for 2011. Some 8.5 percent of Germans were out of work in March.

“We cannot confirm expectations that there will be a drastic increase in unemployment due to the latest economic crisis,” said Karl Brenke, the DIW’s export for employment.

Germany fell into recession in 2008 as the global crisis sapped demand for its exports.