German 2005 growth projections down to 0.75pc

9th May 2005, Comments 0 comments

9 May 2005, BERLIN - A leading German economic research institute on Monday lowered its economic growth rate prediction to just 0.75 percent this year and cautioned that 2006 would not be much better.

9 May 2005

BERLIN - A leading German economic research institute on Monday lowered its economic growth rate prediction to just 0.75 percent this year and cautioned that 2006 would not be much better.

The Cologne-based IW, in a press conference in Berlin, said the 2006 growth rate was now foreseen at only around one percent. Previously, the IW had projected between 1 and 1.5 percent growth for this year.

IW director Michael Huether told journalists the institute does not expect unemployment next year to drop below an average 4.7 million.

Huether criticised the debate about capitalism triggered by Social Democratic Party leader Franz Muentefering as a factor now preventing a turnaround in the mood of the country.

He charged that a "crisis of confidence" was hurting the economy, with the Social Democrat-Greens government lacking a willingness to carry out reforms.

The projections by the IW, which is closely associated with German employers, are well below the German government's projections. Berlin foresees 1 percent growth this year and 1.6 percent next year, with joblessness in 2006 dropping to an average 4.5 million.

The country's six leading independent economic think tanks recently predicted 0.7 percent growth for Germany this year, and 1.5 percent in 2006.

The IW predictions came while the Economics Ministry in Berlin reported that German industrial output slipped from February to March, chiefly reflecting problems in the construction industry, but performed slightly higher year-on-year.

The ministry said total industrial output was 0.8 percent down in March from the previous month. The severe winter weather caused a 10.8 percent drop in construction, accounting for much of the downturn.

In two-month comparisons, industrial output in the February-March period was down 1.2 percent from the preceding December-January time frame, but was 1.8 percent higher than in February-March 2004, the ministry said.

Manufacturing, a core component of total figures, showed a 0.3 percent increase in March over February, with industry output in the February-March period up 3.3 percent from the same two months a year earlier.

Construction in the February-March period was down 21.4 percent from the same two months of 2004, while energy production was up a slight 0.2 percent year-on-year for the two months, the ministry figures showed.

DPA

Subject: German news

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