Bundesbank optimists prevail

In its latest monthly report, the Bundesbank said Monday the German economy continued to be in robust, adding that the economy was likely to pick up speed in the weeks ahead due to a more favorable world economic climate.

The central bank pointed to a slow, but steady recovery in Germany's main export area, the eurozone, where demand was increasing, too. It said the situation on the domestic market should also improve further as wage hikes were likely to fuel consumption.

It had no reason to call into question the government's plan to come up with a more or less balanced budget this year and in 2015, following a marginal deficit of 0.1 percent last year, the Bundesbank said.

Property bubble?

It added, though, that more investments ought to be made in education and infrastructure to ensure Germany's attractiveness as a business location.

Turning to the real estate market, the central bank declined to speak of a bubble that might burst any time soon. There was no such danger despite apartments and private homes becoming more and more expensive, the bank stated.

It noted there was a 6.25 price hike for private apartments in 2013, with costs going up particularly in cities such as Berlin, Hamburg and Munich.

About 177,000 new apartments were built last year, but the bank said there was demand for at least 260,000, with potential buyers wanting to make use of record-low interest rates.

hg/kms (Reuters, dpa)