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Last Updated: Monday, 21 August 2006, 12:47 GMT 13:47 UK
Merkel cheers Germany's recovery
German Chancellor Angela Merkel
Angela Merkel says Germany's economy has turned the corner
German Chancellor Angela Merkel has saluted her nation's growing economic recovery, declaring that Germany is no longer "the sick man of Europe".

Commenting on last week's economic data, which showed the best quarterly growth figures since 2001, she said Germany had "turned the corner".

Reductions in the budget deficit and an upturn in the world economy helped to cut unemployment and boost growth.

Ms Merkel was speaking after nine months in office as chancellor.

Football factor

Germany has laboured under slow growth and high unemployment for years. Now increased domestic demand is helping to change the picture.

Germany has turned the corner
Angela Merkel

The economy grew by 0.9% between April and June this year. This was the best figure since 2001.

Investment in the construction sector was a major factor in fuelling growth. The World Cup also played a large part in helping to lift growth.

Ms Merkel plans to raise taxes, a move she agrees will be unpopular.

The brighter economic picture should make this move more palatable to voters, say analysts - and it lends credence to her pledge to make Germany one of the three most dynamic economies in Europe.

Germany's unemployment rate dropped for the fourth month in a row in July with a better than expected fall of 84,000.

According to EU statistics office Eurostat, German unemployment is now running at a rate of 8.2%, down from 9.5% at the start of this year.

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