Economic Growth in Germany May Slow
Mar. 02, 1999
BONN, Germany (AP) _ A key commerce association lowered its 1999 growth prediction for Germany from 2 percent to 1.5 percent today, citing uncertain economic policies by the new government.
``Nowhere can we see a new impulse for economic growth,'' said the Franz Schoser, director of the German Association for Industry and Trade, known by it's German initials DIHT.
Presenting a survey of 25,000 businesses in Germany, Schoser said companies expect the first downturn in the German economy since 1996.
Areas cited by Schoser as positive impulses for German businesses _ including low interest rates and price stability _ were mostly the domain of the European Central Bank, which sets monetary policy for the 11 nations that launched the euro Jan. 1.
Schoser, however, said these factors were insufficient to offset export weakness, declining investment, rising wage costs and an economic policy that is hampering growth.
The German government had hoped that domestic demand would power economic recovery, but the DIHT said that too was lagging expectations.
Schoser also disputed Finance Minister Oskar Lafontaine's position that dropping interest rates would stimulate growth, saying that was unlikely given the already low 3-percent rate. Schoser said he doesn't expect the European Central Bank to cut rates in the first six months of the year.
The bank holds its regular, biweekly meeting Thursday at which it will decide whether to change interest rate levels.