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German Economic Outlook Has Improved, IWH and Kiel Economics Say

The German economy had a better- than-expected start to 2012 as risks from the euro region’s debt crisis eased, the Halle-based IWH economic institute and Kiel Economics said in a joint economic outlook.

The German economy, Europe’s biggest, will expand 1.3 percent this year and 2.2 percent in 2013, the two institutes said in a joint forecast. The unemployment rate will drop to 6.4 percent in 2012 and reach 6.1 percent next year, the institutes said. Germany’s budget will return to surplus in 2013, they said.

Germany’s benchmark DAX share index is up about 20 percent this year, outperforming its main European counterparts as investors bet on a return to growth after a contraction in the fourth quarter of 2011. Investor confidence rose to a 21-month high in March after the European Central Bank flooded financial markets with cash.

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