German institute cuts growth forecast

13th December 2004, Comments 0 comments

13 December 2004 , ESSEN - Economic research institute RWI on Monday lowered its 2005 growth forecast for Germany to just 1.3 percent, from its previous projection of 1.8 percent, in becoming the second major think tank in as many weeks to reduce its expectations for Europe's largest economy. The Rheinisch-Westfaelische Institut fur Wirtschaftsforschung said its lowered projection was based on the unexpected slowdown in Germany's third-quarter 2004 growth rate. At the same time, RWI said Germany's budget d

13 December 2004

ESSEN - Economic research institute RWI on Monday lowered its 2005 growth forecast for Germany to just 1.3 percent, from its previous projection of 1.8 percent, in becoming the second major think tank in as many weeks to reduce its expectations for Europe's largest economy.

The Rheinisch-Westfaelische Institut fur Wirtschaftsforschung said its lowered projection was based on the unexpected slowdown in Germany's third-quarter 2004 growth rate.

At the same time, RWI said Germany's budget deficit would be 3.4 percent of the gross domestic product (GDP) next year, making it the fourth year in a row that Berlin will have failed to meet the 3.0 percent limit set under European Union monetary stability pact rules.

The RWI also predicted a rise in average unemployment in 2005 to around 4.5 million as a result of the reforms in Germany's social welfare system taking effect next year when welfare recipients will be registered on the county's jobless rolls.

Last week, the IfW insitute in Kiel lowered its growth rate forecast for Germany next year to just 0.8 percent, from its previous 1.2 percent projection.

The IfW cited a sharp drop in foreign demand in the third quarter in making its downward revision. The Kiel institute also projected average unemployment in 2005 of 4.48 million, compared with this year's average of 4.38 million.

DPA

Subject: German news

0 Comments To This Article