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Business

DIW institute sees economy grow even in final quarter

A leading German think tank has said that Europe's largest economy will be able to steer clear of recession in the fourth quarter of this year. Its assessment is more optimistic than of other institutions'.

Germany will not deviate from its course of growth, even in the final quarter of 2012, the German Institute for Economic Research (DIW) said in its monthly report on Thursday. It said the domestic economy would continue to be robust enough to weather the ongoing sovereign debt crisis.

The DIW penciled in 0.2 percent growth for the fourth quarter, thus providing a more upbeat forecast than other think tanks had dared make in recent weeks.

The Munich-based Ifo institute maintained earlier this week that the German economy would stagnate in the final three months of the year, while the country's central bank, the Bundesbank, wouldn't even rule out a slight recession for the period.

Germans in a spending mood

But the Berlin-based DIW insisted there would be no contraction despite a worsening business climate in the country, saying that domestic consumption would be a reliable pillar of the economy as unemployment was low and wage hikes left many people with more in their pockets.

The institute acknowledged, though, that export-oriented companies would feel the bite of slumping demand.

"Towards the end of the year, exports to nations outside the ailing eurozone will also decline," DIW Economist Ferdinand Fichtner predicted.

But he expected the growth slowdown in strategically important emerging countries to stop soon, which would make it easier for German countries to offset some of the losses incurred in their European business.

hg/kms (dapd, Reuters)