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German economy 'set to improve'

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Germany will avoid a recession and its economy is set to return to growth in 2013, according to the country's central bank.

A monthly forecast report for February composed by the Bundesbank suggested that the 12-month period will see a steady improvement in activity throughout the European continent in general.

In the final quarter of 2012, the German economy contracted by 0.6 per cent - and this means that if it shrank in the first quarter of 2013, the country would be in a technical recession.

Germany is not the only country that can be expected to return to growth in 2013, as similar reports suggested that the UK's economic fortunes could also be set to improve for the better.

A forecast paper from the National Institute Economic Review acknowledged that growth was zero in 2012, but went on to suggest that this could expand to 0.7 per cent in 2013.

It was also suggested that this could be the start of a sustainable recovery, as growth is predicted to increase further to 1.5 per cent the following year.

Germany's gross domestic product slowed throughout 2012.

While it stood at 0.5 per cent in the first quarter of the year, it shrunk to 0.3 per cent in Q2 and then again to 0.2 per cent in Q3.

"As it currently looks, a plus in economic output can be expected in the first quarter of this year," a statement from the Bundesbank read.

The report continued: "For the rest of this year, the economy is expected to pick up gradually, even if the external economic environment will provide no trigger for a sharp surge in demand."

Indeed, the purchasing power of consumers and industry in Germany is seen as one of the key economic driving forces in the 17-nation eurozone as a whole.

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