Europe's Locomotive Is Back on Track

Germany leads the continent in productivity hikes and labor flexibility. Despite a boost to VAT, experts predict a long-term rise in growth

Normally a prediction that growth is set to fall by half isn’t good news. But Allianz Dresdner Bank Chief Economist Michael Heise was positive about the German economy Oct.10, even as he predicted growth will slow to 1.2% in 2007, after an estimated 2.4% in 2006. Despite the slowdown, he told reporters, German companies are continuing to boost productivity and profits, while unemployment remains on a downward trend. "German companies are very well-positioned on the world market," Heise said.

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