Germany raises growth forecast to 1.5% as consumers begin spending

Figures show lower fuel prices and weaker euro are boosting disposable income

“The German economy has returned to growth regardless of geopolitical turbulence,” says  economics minister  Sigmar Gabriel . Photograph: EPA/Bernd von Jutrczenka

“The German economy has returned to growth regardless of geopolitical turbulence,” says economics minister Sigmar Gabriel . Photograph: EPA/Bernd von Jutrczenka

 

Germany has raised its 2015 growth forecast to 1.5 per cent, matching last year’s performance, as its famously finicky consumers have started a national shopping spree not seen since 2001.

German economic minister Sigmar Gabriel said lower energy prices and a weaker euro were acting like an economic stimulus programme.

“The German economy has returned to growth regardless of geopolitical turbulence,” said Mr Gabriel, leader of the Social Democratic Party (SPD).

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In October, fearing economic blow-back from the Russia-Ukraine conflict, Germany dropped its 2015 forecast from 1.8 to 1.3 per cent.

The GfK market research group yesterday published data indicating consumer confidence will rise to 9.3 points in February – the highest level since 9.6 points in November 2001.

In a statement, the GfK pointed to reduced fuel costs as a boost to disposable income among the 2,000 Germans it interview for its survey.

“German consumers have evidently been affected, too, by the major collapse in energy prices over the past few weeks,” said the GfK in a statement. “German consumers feel that their economy is currently enjoying a renewed upswing.”

A stable labour market and low inflation saw consumer economic expectations for the next months rise eight points to 22.5 points, the second successive rise.

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“If Greece wants to deviate from some [reform] measures, it must bear the cost itself rather than exporting this to other European countries via a haircut or other such ideas,” said Mr Gabriel. He said a so-called “Grexit” was the wrong solution but such a decision was up to Athens.