Floods could cost Germany 12 bln euros in economic damage, warns Fitch
Baku, June 12 (AZERTAC). Floods that have devastated parts of southern and eastern Germany could briefly impede growth in Europe's biggest economy, an industry body said, while ratings agency Fitch said the economic cost could be as high as 12 billion euros.
That would be more than the damage in 2002 when the region suffered high waters on a similar scale.
Hundreds of thousands of people in Germany, the Czech Republic and Slovakia have been evacuated from their homes in the last week as floods swept through central European cities and countryside, causing factories to halt production.
Ulrich Grillo, head of Germany's BDI industry association said it would be difficult, but still possible, for Germany to achieve the group's 0.8 percent growth forecast for this year.
"It is difficult to assess the influence of the floods," said Grillo, adding that reconstruction work would in the long run probably compensate for the initial drag on the economy.
However, the economy ministry said growth had picked up in the second quarter helped by higher demand for German industrial goods and Economy Minister Philipp Roesler said the government's forecast for 0.5 percent growth this year was manageable.
The ministry said in its monthly report for June that "the relatively long and severe winter" was one of the main reasons for a weak first quarter when the German economy grew by a mere 0.1 percent.
Chancellor Angela Merkel, facing an election in September, has promised 100 million euros in aid for flooded areas including around Passau in southern Bavaria, Dresden in the eastern state of Saxony and other more northern areas.
Cologne's Institute for Economic Research has said the deluge could cost more than 6 billion euros.
Fitch said insurers could face a hit of up to 3 billion euros from damage claims, but there would be no big threat to their credit ratings.
Carmaker Volkswagen (VOWG.DE) was one of the companies forced to shut a plant in the eastern state of Saxony and shipping on the Rhine was interrupted.
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