Germany Set To Further Slash 2019 Growth Forecast

Berlin, (UrduPoint / Pakistan Point News - 17th Apr, 2019 ) :Berlin is set to further lower its economic growth forecast Wednesday as Europe's largest economy cools off, but ministers are unlikely to bend to foreign demands to boost activity with extra government spending.

According to media reports, the German government will unveil figures predicting gross domestic product (GDP) will increase by just 0.5 percent this year.

The downgrade, if confirmed, comes after economy minister Peter Altmaier in January announced expectations of just 1.0 percent expansion in 2019, knocking 0.8 points off an autumn forecast.

Global factors including slowing trade, Brexit and US President Donald Trump's commercial confrontations with Europe and China have hit the eurozone powerhouse particularly hard.

And a string of local one-off factors were blamed by economists for throttling expansion.

In the vital car industry new emissions tests proved a bottleneck for manufacturers, while a harsh drought lowered water levels in the Rhine river, a key waterway for firms in sectors such as chemicals.

But more structural challenges are also present, including an ageing population and a chronic lack of public investment in infrastructure and high-tech innovations.

The International Monetary Fund in its April economic outlook repeated its long-running call for Germany to spend its way out of a downturn.

To avoid the German slowdown contaminating the rest of the eurozone, "the available fiscal space can be used to increase public investment in physical and human capital or reduce the labour tax wedge", the IMF judged.

The Washington-based fund also slashed the country's growth forecast to 0.8 percent, in line with domestic bodies such as Berlin's "Wise Men" council of economic advisers and leading think-tanks.