BERLIN: Companies could benefit from heightening their attention on Germany, which is now poised for a significant increase in consumer spending.
"Ten years ago, Germany was the 'sick man of Europe,'" Holger Schmieding, chief economist at Berenberg Bank, told Bloomberg. "[Now,] Germany will enjoy a golden decade of more growth and employment with a healthy fiscal balance."
Projections from Jefferies International, the investment bank, have suggested that consumer spending in the country should expand by over 2% next year, versus an average of 0.75% since 1999.
"When discussing prospects for Germany, the focus often revolves around the outlook for exports," said David Owen chief European financial economist. "However, there is certainly scope for German domestic demand to surprise on the upside."
Among the factors supporting this trend is falling unemployment. Germany's jobless rate stood at 6.7% in March 2012, the lowest level for two years.
Figures from DIHK, the industry body, also showed that German firms have created 250,000 jobs in 2012 to date, including 80,000 in health and social services, 50,000 in IT and 40,000 in engineering.
Elsewhere, Goldman Sachs estimated wages will increase by an annualised rate of up to 4% domestically, with income growth and household expenditure rising by approximately 2% when adjusted for inflation.
"[Although this] would not qualify as a consumption boom, it would imply a markedly larger contribution than seen in the past," Dirk Schumacher, an economist at Goldman Sachs, said.
William White, an advisor to the Organisation for Economic Cooperation and Development, argued boosting shopper expenditure could prove advantageous for other European markets.
"Anything that will get the Germans to spend more money at home, and therefore reduce the external surplus, is a good thing," he said.
The International Monetary Fund has reported that Germany boasted a current account surplus of 5% in 2011, compared with the deficit of 8% logged by Greece.
Data sourced from Bloomberg; additional content by Warc staff