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German growth forecast cut but no panic

Thursday, October 17, 2013 - 01:15

Oct.17 - Germany's leading economic institutes halved their 2013 growth forecast to 0.4% on Thursday, due to a significant downturn in industrial production during the winter. As Joanna Partridge reports, despite revising down their figures, the institutes say Europe's largest economy is on the cusp of an upturn, driven by domestic demand.

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Germany's economy has powered ahead while its neighbours have struggled. Now the country's leading economic research institutes have halved their 2013 growth forecast. They expect Europe's biggest economy to grow by 0.4% this year. They blamed the cut on a significant downturn in industrial production during the winter. The institutes also trimmed their estimate for 2014 from 1.9% to 1.8%. But there is a silver lining. Germany is on the cusp of an upturn, says Roland Doehrn from the RWI Economic Research Institute. SOUNDBITE: PROFESSOR ROLAND DOEHRN, HEAD OF GROWTH, ECONOMY AND PUBLIC FINANCES DEPARTMENT AT "RWI" ECONOMIC RESEARCH INSTITUTE, SAYING (German): "This will be driven by domestic demand, the improving world economic situation and a decreasing uncertainty among investors which boosts investment. The favourable employment and income outlook will considerably boost domestic demand and domestic construction." The improving global outlook is also expected to give a slight nudge to Germany's exports. The institutes' analysis feeds into the German government's own economic forecasts. They're due for an update later this month. The forecast comes as German Chancellor Angela Merkel's Christian Democrats met for a third round of talks with the Social Democrats. There are hopes the talks may lead to a grand coalition within the next two months.

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German growth forecast cut but no panic

Thursday, October 17, 2013 - 01:15