Weak German growth set to continue

19th October 2004, Comments 0 comments

19 October 2004 , BERLIN - Germany's growth will remain lacklustre through next year and public spending will breach the Maastricht Accord for a fourth straight year, according to the autumn forecast issued Monday by the country's six leading economic research institutes. This year's growth in gross domestic product (GDP) is set to come in at 1.8 percent, while five institutes said they calculated next year's at a weaker 1.5 percent because of the calendar. There are fewer working days in 2005 than in 2004

19 October 2004 

BERLIN - Germany's growth will remain lacklustre through next year and public spending will breach the Maastricht Accord for a fourth straight year, according to the autumn forecast issued Monday by the country's six leading economic research institutes.

This year's growth in gross domestic product (GDP) is set to come in at 1.8 percent, while five institutes said they calculated next year's at a weaker 1.5 percent because of the calendar.

There are fewer working days in 2005 than in 2004, when some public holidays fall on weekends. One institute made a more optimistic prediction of two percent growth next year, and the entire panel said 2005 would "not be a bad year".

No significant spurt in German domestic demand is expected next year by the economists, who say "tangible" growth in the first half of this year has been based exclusively on stronger exports.

"The weakness of the domestic economy is continuing for an unusually long period," the report said. A recovery in the world economy is expected to slacken pace next year as growth eases in the Chinese and US economies, undercutting growth in German exports.

Politically, the long spell of economic weakness spells trouble for the government of Chancellor Gerhard Schroeder, since not only will public borrowing exceed the limits in the European growth pact but unemployment will remain high.

The institutes appealed to German Finance Minister Hans Eichel to cut spending or else public borrowing would hit 3.5 percent of GDP. Eichel has said he is planning no new cuts. Eurozone nations are supposed to limit net public borrowing to 3 percent of GDP.

DPA

Subject: German news
 

0 Comments To This Article