The Head of European Equities, DWS Investments says that the German economy is forecasted to grow by 2.8% in 2011 as there is significant growth potential for the German economy in the coming years.
“The German economy continues to boom,” says Henning Gebhardt, Head of European Equities, DWS Investments. “Just a few weeks ago leading German economic research houses raised their forecasts for the German GDP growth to 2.8%. We forecast a growth of 3% year over year. In 2011, there is a high likelihood that Germany will again show the highest growth within the euro zone – as it did in 2010.”
DWS Investments says that Germany has retained a competitive advantage over its European counterparts with positive earnings from German companies contributing to a strong economic situation.
“We see growth potential for the German economy in the coming years, too,” says Gebhardt. “German companies have done their homework and have improved their competitive position significantly. This is partly due to a tight control of unit labour costs over the last few years. Many other European countries suffered from significantly increased unit labour costs, which gave them a competitive disadvantage. A further indication of Germanys competitiveness is the constant high GDP share of the manufacturing industry over the past years. While other countries had to relocate production to other countries, Germany was able to keep a large part of the production at home.”
Although, the sovereign debt crisis has created serious concerns for long term investors, DWS Investments says that there is positive sentiment for the medium term.
“The ongoing uncertainty about a solution for the European sovereign debt crisis, stronger increased raw material prices as well as a possible headwind by a stronger euro are currently weighing on the stock market and could result in an higher volatility, especially during the summer months,” says Gebhardt. “Several economic indicators, like the IFO business climate index, could also get weaker and thus signal a slight slowdown of the economy in the second half of 2011. Therefore we have a conservative outlook for the DAX at the end of the year of 7600 to 7800 points. The mid-term outlook remains nevertheless positive and ideally new all-time highs for the DAX could already be within reach this year.”
(LB)