German investment expected to rise significantly in 2014

Investment in Germany was expected to increase significantly in the coming year, strengthening the growth potential of the Europe's largest economy, an institute said Wednesday. With a recovery of world economy, German exports are likely to revive fast. The companies therefore have greater incentives to invest again, especially as the financing environment continues to be favorable," said the Berlin-based German Institute for Economic Research (DIW). The institute forecasted that investment for equipment would grow by 6 percent in 2014, following a drop of 2 percent in 2013. For the year of 2015, the growth rate was expected to be 9 percent. According to the institute, global economic output would grow by 3.8 percent in 2014 and by 4.1 percent in 2015, thanks to the recovery of the United States and emerging economies like China and India. The eurozone was expected to return to growth track in the coming years with a growth rate of 1 percent in 2014 and 1.3 percent in 2015. "The positive development of the world economy and the return of growth in the euro area will help the German export industry," said DIW President Marcel Fratzscher. Besides, private consumption would continue to be a central pillar for German economy. Thanks to moderate inflation, stable labor market, and low interest rate, consumer spending was expected to rise by 1.3 percent in 2014, and by 1.7 percent in 2015, after a growth of 1 percent in the current year. Earlier on Wednesday, the Munich-based Ifo research institute released its business sentiment indicator, showing that firms in Germany were the most optimistic about German economic outlook since spring 2011. DIW expected German economy to grow by 1.6 percent in 2014, following an expansion of 0.4 percent in 2013. Earlier in December, German central bank Bundesbank released a more optimistic forecast, saying that the gross domestic product in Germany would rise by 0.5 percent in 2013, and by 1.7 percent in the coming year.