Germany's IfW think tank on Thursday upwardly revised growth estimate for 2012 despite a less dynamic expansion seen over the remainder of the year. The 2012 growth estimate was revised up to 0.9 percent from 0.7 percent projected in March. For 2013, growth is seen at 1.7 percent.
According to the think tank, economic dynamism is likely to be quite weak around the middle of this year and to gradually gain momentum until the forecast horizon.
Further, the upswing in the German labor market is forecast to continue at a more moderate pace in the remainder of this year, gaining more momentum during the course of the next year. The unemployment rate is seen easing to 6.6 percent in 2013 from 6.7 percent this year.
The think tank expects the fiscal deficit to disappear next year due to higher taxes and social contributions that rise in line with economic activity.
In a separate report, the institute said global growth is seen at 3.4 percent in 2012, down from 3.9 percent in 2011. For the euro area, the think tank projects a decline in GDP of 0.4 percent followed by an increase of 0.9 percent in 2013.