German economic upturn in doubt

19 April 2004

BERLIN – A leading German economic research unit raised serious questions Monday about the strength of the upturn in the economy while also warning that no relief was apparent in the job market.

The German economic institute IW, unveiling in Berlin the mood of companies, said at the moment it foresaw no far-reaching recovery in Europe’s largest economy.

Nor were there any prospects for the kind of recovery “which also could help the labour market back on its feet”, the Cologne-based IW said.

It said its survey of 1,133 companies in eastern and western Germany presented a picture of mixed feelings, with confidence seen only in German firms’ foreign business expectations.

German Economics Minister Wolfgang Clement, in remarks coinciding with the IW report, said he hoped the Hanover Fair opening Monday would help boost the economy.

He said there were signs of a revival, but that the recovery still needed to be stronger, especially with regard to domestic demand.

Clement said he was expecting the German economy to grow between 1.5 and 2.0 percent this year, while criticising what he saw as a “competition of increasingly lowered economic forecasts”.

At the Hanover Fair, the influential Federation of German Industry BDI appeared to join the sceptics about the strength of the economic upturn, predicting that 2 percent growth is no longer attainable.

BDI president Michael Rogowski said he expected a rise of between 1.5 and 1.7 percent at the most. The inadequate growth stems from weak consumer spending as a result of high unemployment and from companies still holding back on their investments.

Subject: German news