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Tuesday, 13 March, 2001, 16:12 GMT
German economy's 'robust growth'
German production line
Germany's economy resists talk of a downturn
German Chancellor Gerhard Schroeder is eager to counter talk of a downturn in Europe's largest economy.

He said on Tuesday that Germany's economy was "still on a path of robust growth", adding that he saw "no reason for the exaggerated pessimism".

His views conflict with many economists who have been downgrading their forecasts for Germany, following the recent slowdown in the US.

Gerhard Schroeder
Gerhard Schroeder: "No reason for the exaggerated pessimism"
The German government expects output to grow by 2.75% this year, while most economists are predicting growth of between 2% and 2.2%.

But the latest data out of Germany seems to support Mr Schroeder's assertions.

Figures released on Tuesday show that the country's exports jumped by 23.6% in January compared with a year earlier, beating analyst expectations.

Inflationary pressure

The downside, according to the Federal Statistics Office, is that German inflation rose 2.6% in February, a six year high.

This compares with a 2.4% increase in January, and 2.2% in December.

The German consumer price index also rose by 0.6% in February compared with the month before.

Such price increases step up the pressure on the European Central Bank to keep interest rates unchanged, despite calls for a cut.

This is because higher interest rates are general seen as acting as a dampener on inflation.

The rise in prices has been partly attributed to high oil prices during the winter months.

Germany's economy has implications for the whole euro-zone because the country comprises 35% of economic output.

Trade surplus

As to foreign demand for German goods in January, the Federal Statistics office said the country's trade surplus climbed to 4.45n euros ($4.1bn, 8.7bn marks) in January relative to 2.97bn euros a year ago.


The figures show that German goods are still very much in demand abroad

Stefan Bielmeier
Deutsche Bank
This also compares with a surplus of 1.23bn euros in December 2000.

The data surprised analysts who were expecting trade to weaken, following the US slowdown.

"The figures show that German goods are still very much in demand abroad," said Stefan Bielmeier, senior economist at Deutsche Bank in Frankfurt.

Mr Bielmeier said he had expected a trade surplus of about 4bn euros.

But he maintained that export growth was likely to slow down in the coming months.

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