Enlarge image To assure affordable, safe energy, Germany is setting a course for competitiveness and cost efficiency. (© picture alliance / dpa ) The German economy looks to be on surprisingly smooth waters for the next six months, according to a closely watched economic indicator. The Mannheim-based Center for Economic Research (ZEW) released their economic indicator for January, which asks finance experts to both gauge current and project future business performance. For the upcoming year it jumped 32.2 points, landing at -21.6 points.

This means that Germany can expect economic activity to stabilize in the coming six months, rather than deteriorate. “Contrary to repeatedly expressed fears of a recession, the assessment of the financial market experts gives reason for cautious optimism that Germany will only experience a dent in economic activity,” said ZEW's president, Wolfgang Franz.

Franz pointed to the increased liquidity recently freed up by the European Central Bank and “the relatively affordable refinancing terms for Italy and Spain” as contributors to the increase in January's outlook. Also listed by ZEW as a potential reason for the uplifting news was the sunnier business numbers coming from the US.

Cabinet approves Annual Economic Report for 2012

In related news, Germany's Federal Cabinet approved its Annual Economic Report, one which, while taking into consideration the less than ideal market conditions as well as the necessity of growth outside Germany, nevertheless predicts a 2012 GDP that will grow 0.7 percent.

Enlarge image The City Tunnel Leipzig, which broke ground in September 2011. For future growth, one area of focus will be infrastructure. (© picture alliance / ZB ) “Germany is and will be the anchor for stability and growth in Europe,” commented Philipp Rösler, Germany's minister of economics and technology. Rösler pointed out the previous two growth years, which produced GDP growth of 3.7 and 3.0, respectively, but said that the beginning of 2012 does not promise such robust accretion, largely due to the wavering finances outside Germany. “However,” he continued, “we are absolutely convinced that the German economy will find its way back to higher growth in the course of the year.”

In line with ZEW, the report anticipates a stable 2012 that will endure hiccup this winter. Among the good news projected for 2012: more workers, up to 41.3 million, and a jobless rate that should plunge 6.8 percent; a 3-percent rise in household incomes; and growth that will be driven by domestic economic activity.

The German government will try to energize the market by, among other measures, maintaining a disciplined budget, reducing deficit, prioritizing growth in infrastructure, education and vocational training, opening up the jobs market and setting a mandate on affordable, safe energy.

Otherwise, however, a growing German economy will depend much on economic developments outside its borders. “Continuous growth in Germany is only possible with sustainable growth in Europe,” said Minister Rösler. To overcome the euro crisis, it means that euro-zone countries must become more competitive while putting their finances on stable ground. “Only so will all of Europe reach a path of growth.”