German business warns of slowdown in 2005

18th October 2004, Comments 0 comments

18 October 2004, BERLIN - The mood of German businesses has shown little change in the course of the past six months, while the economy may be in for a slowdown in 2005, the country's top industry and commerce association reported Monday.

18 October 2004

BERLIN - The mood of German businesses has shown little change in the course of the past six months, while the economy may be in for a slowdown in 2005, the country's top industry and commerce association reported Monday.

The Association of German Chambers of Industry and Commerce (DIHK) in Berlin, reporting the results of its autumn survey of businesses, predicted a 1.5 percent growth rate for 2005, down from this year's rise of nearly 2 percent.

DIHK managing director Martin Wansleben said that a further rise in 2005 would in any event mean growth for the second year in a row for the German economy after three years of stagnation.

"The economy will make progress next year as well, albeit only in small portions," Wansleben said in remarks prefacing the autumn survey report.

In its survey of some 25,000 companies, the DIHK said there was little change in the business mood from the last survey in the spring, although the figures provide a slight silver lining for employment prospects.

The survey found that in an economy where exports remain the one reliable factor, 27 per cent of executives see their business improving in the period ahead. Last April the figure was 28 per cent.

At the same time, however, those who now see steady business improved to 49 percent, from 46 percent previously, while those companies seeing worse times ahead fell to 24 percent, from 25 percent last April, the DIHK said.

The survey showed the promise of some slight improvement for payrolls, the DIHK said. Today, 10 percent of companies expect to increase their work force, as against 9 percent half a year ago.

At the same time, 63 percent of companies expect to maintain payrolls at current levels, up from 61 percent last April, while 27 percent expect payroll reductions ahead. Last April, 31 per cent expected to lower their payrolls.

"The economy is advancing only little by little," the DIHK, the umbrella organisation for 81 chambers of commerce representing some three million small- and medium-sized companies, said.

It said exports remained the only reliable factor in the economy, with 43 per cent of firms now expecting a rise in their exports. Early last summer, the figure was 35 per cent. Those expecting exports to drop came to 8 per cent, as against 13 per cent previously.

The DIHK projection of 1.5 percent growth next year came a day before Germany's six leading economic institutes were to issue their autumn report which is also expected to predict a lower growth rate.

According to the newspaper Die Welt, five of the six institutes also foresee German growth of 1.5 per cent in 2005. One institute, the DIW in Berlin, is projecting a higher rise, of 2 per cent.

The six institutes see the German economy showing 1.8 per cent growth this year.

DPA

Subject: German news

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