- Title: Top institutes slash growth forecasts for German economy
- Date: 2nd October 2019
- Summary: BERLIN, GERMANY (OCTOBER 2, 2019) (REUTERS) CAMERAMEN FILMING ECONOMISTS FROM LEADING INSTITUTES AT NEWS CONFERENCE SIGN IN GERMAN READING: "FEDERAL PRESS CONFERENCE" (SOUNDBITE) (German) CLAUS MICHELSEN, ECONOMIST AT BERLIN'S DIW INSTITUTE, SAYING: "The German economy has cooled further this year and probably contracted in both quarters that fell during the summer (the German economy contracted in the second quarter and growth data for the third quarter has yet to be published). The reasons for the economic slowdown lie primarily in the industrial sector, where production has declined since the middle of last year, especially because demand, in particular for investment goods, has weakened in important markets. The industrial sector is in a recession and this is gradually having an impact on industry-related services too. The institutes expect gross domestic product to increase by only 0.5% in 2019, so 0.3 percentage points lower than we predicted six months ago." PEOPLE WATCHING NEWS CONFERENCE ECONOMISTS FROM LEADING INSTITUTES SITTING (SOUNDBITE) (German) CLAUS MICHELSEN, ECONOMIST AT BERLIN'S DIW INSTITUTE, SAYING: "Macroeconomic capacity utilisation is still higher than the long-term average so we can't talk about a big economic crisis at the moment despite the downturn in economic output. As a result, the institutes don't see any need at the moment for a comprehensive economic stimulus programme like we had around 10 years ago during the financial crisis in the form the car scrappage incentive scheme, for example. Sticking to the balanced budget as an end in itself would be totally wrong - saving at a time when there is an economic downturn would only worsen the problems." CAMERAMEN JOURNALISTS AT NEWS CONFERENCE (SOUNDBITE) (German) CLAUS MICHELSEN, ECONOMIST AT BERLIN'S DIW INSTITUTE, SAYING: "A disorderly Brexit would have a significant impact on the German economy. Our simulations show that if there is a disorderly Brexit, German economic growth would likely be 0.4 percentage points lower next year and then a further 0.3 percentage points the following year. But if relations with Britain are quickly clarified, the economy could develop more positively." JOURNALISTS LEAVING NEWS CONFERENCE
- Embargoed: 16th October 2019 12:08
- Keywords: German economy German Economy Minister Peter Altmaier growth forecast
- Location: BERLIN, HAMBURG, GERMANY, UNKNOWN LOCATIONS
- City: BERLIN, HAMBURG, GERMANY, UNKNOWN LOCATIONS
- Country: Germany
- Topics: Economic Events
- Reuters ID: LVA004AZEKSR1
- Aspect Ratio: 16:9
- Story Text:Germany's leading economic institutes on Wednesday slashed their growth forecasts for Europe's biggest economy for this year and next, blaming weaker global demand for manufacturing goods and increased business uncertainty linked to trade disputes.
The institutes said they expect the German economy to grow by 0.5% this year and 1.1% in 2020. That compared with their April estimates of 0.8% and 1.8% respectively. For 2021, the institutes predict a mild recovery with economic expansion of 1.4%.
The revisions, which feed into the government's own forecasts, reflect growing fears that a slowdown in Germany, driven by a recession in the export-dependent manufacturing sector, could hamper the broader euro zone economy.
Economy Minister Peter Altmaier said the outlook was subdued due to international trade conflicts and the unresolved issue of Brexit but added that Germany was not experiencing an economic crisis and the government therefore did not need to abandon its policy of avoiding new debt.
Claus Michelsen, an economist at Berlin's DIW institute, said the institutes did not see any need for a comprehensive economic stimulus programme. But he said it would be wrong for Chancellor Angela Merkel's coalition government to stick to its policy of avoiding new debt at a time of economic downturn.
The government is due to publish its own growth forecasts on Oct. 17.
(Production: Leon Malherbe, Olli Barth, Tanya Wood, Michelle Martin) - Copyright Holder: REUTERS
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