German economy is expected to grow at a rate of 3.4% this year, beating the earlier expectations of 1.4%, according to a report released by the German government on Thursday.
The updated forecast for 2011 is a 1.8%, showing a modest decline given the unstable global economic indicators.
The improved forecast is mainly attributed to a major surge in German economy as it saw a surge of 9% in annualized growth rate in the second quarter. Employment indicators have also improved in recent months and there is an overall boost in investors' confidence suggesting economic recovery at higher pace.
Economics Minister Rainer Brüderle said the growth increased because of increased sales of German products in foreign markets, especially in India and China. A number of economic think-tanks and institutes, some of which advise the German government, forecast a growth rate of 3.5% rate of growth for 2010 and 2% for 2011.
Good news for Germany came after suffering its worst recession since World War II last year when the economy contracted 5%. The latest forecast puts private consumption growing at a rate of 0.1% this year and 1.1% in 2011. Domestic demand rose 2.4% this year and is expected to see a 1.3% increase next year. Exports are also expected to surge by 15% this year and 8% in 2011, with the imports rising 14% this year and 7.7% next year.
Industrial production and manufacturing orders rallied 1.7% and 3.4%, respectively, in August. Up to 3.2 million Germans are expected to be out of work at the end of this year, with 2.9 million expected to lose their jobs next year.
