Germany could see far higher economic growth than previously expected this year, business experts say. Meanwhile, the government is hoping increased growth will help reduce the budget deficit.
German economy is in better shape than expected
The German Chamber of Commerce and Industry (DIHK) expects record growth of 3.4 percent this year.
Exports have helped to fuel growth in recent months
Several favorable conditions mean that an already better-than-expected rate of growth for German economy is set to continue, according to DIHK chief Martin Wansleben.
The recovery is expanding," Wansleben told the German weekly news magazine Der Spiegel.
Businesses were investing again and "even consumption is accelerating thanks to favorable developments in the labor market," he said in comments to be published on Monday, August 22.
The DIHK forecast is significantly higher than a revised 3-percent forecast issued by Germany's central bank on Thursday, against a previous estimate of just under 2 percent. If the DIHK forecast is correct, Germany would meet the same growth record that it set in 2006.
'Good chances' of deficit drop
Schaeuble was optimistic that growth would have a big impact on the deficit
Meanwhile, Germany could benefit from a reduction of its budget deficit after the country recorded its highest quarterly rise in growth since reunification earlier this month according to Finance Minister Wolfgang Schaeuble.
The government had expected that the level of deficit for 2010 would be 65 billion euros ($82.6 billion), but Schaeuble said he expected that figure to fall.
"I see good chances that we will finish under 60 billion euros this year," the minister told the Rheinische Post regional newspaper.
Gross domestic product was 2.2 percent higher in the second quarter of 2010 than in the first three months of the year, with exports contributing significantly to the rise.
Richard Connor (dpa/AFP/Reuters)
Editor: Toma Tasovac