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Government Predicts 2.5-Percent Growth in 1987

January 14, 1987

BONN, West Germany (AP) _ In an upbeat economic report less than two weeks before national elections, the West German government predicted the country’s economy would grow at least 2.5 percent in 1987.

The report, issued Wednesday by Economics Minister Martin Bangemann, also predicted that unemployment would remain at the current 8.5 percent level and that the inflation rate would stay below 1 percent.

Bangemann, speaking at a news conference, said the economic growth, which would match the 1986 expansion, would be fueled by substantial increases in private spending and corprorate investments.

Chancellor Helmut Kohl’s conservative government is predicted by opinion polls to stay in power after the Jan. 25 national election.

The country’s good economic performance has been one of Kohl’s main campaign themes.

The government said the main boost for the economy is expected to come from domestic consumption, but it also said exports, which fell slightly in 1986, should again post a minor increase.

The report said exports, which dropped a price-adjusted 0.6 percent in 1986 mostly because of the falling dollar, will rise ″between 1 percent and 2 percent,″ which would mean a return to the upward export trend of 1984-1985.

The report gave one of the lowest inflation projections among the major industrialized nations. After a 0.2-percent decline in the average 1986 consumer prices from the average 1985 price level, inflation is expected to be below 1 percent in 1987, it said.

The government said that lower oil prices and the strength of the German mark, which were behind the country’s low 1986 inflation rate, would continue to have a dampening effect on 1987 consumer prices.

Government officials said the projections are based on expectations that the dollar exchange rate, currently around 1.85 marks, will stay close to present levels. They also did not expect major shifts in the oil price.

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