Germany Further Slashes 2019 Growth Forecast

Germany further slashes 2019 growth forecast

Berlin halved its economic growth forecast for 2019 on Wednesday as Europe's largest economy cools off, but ministers are unlikely to bend to foreign demands to boost activity with extra government spending

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

"The Federal government expects an increase of 0.5 percent in gross domestic product (GDP) this year and 1.5 percent" in 2020, economy minister Peter Altmaier told a press conference in Berlin.

"The German economy has not yet overcome the weakening in the economic upturn" that had been visible until mid-2018, he added, although "over the remainder of the year there are prospects of a significant recovery." It is the second downgrade in a row, after Altmaier's January prediction of 1.0 growth for 2019 was 0.8 points lower than 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 including tough new emissions tests on car manufacturers and a drought that lowered water levels in the Rhine inland waterway, put a brake on activity.

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 (IMF), 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.

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