November 2003 - Nr. 11
Economy to take turn for the better, say experts
TWIG - The German economy has turned a corner and is expected to grow modestly next year after three years of stagnation, say experts at the country’s six leading economic institutes.
The institutes predicted that domestic demand will begin picking up steam by the middle of next year, resulting in economic growth of 1.7% for 2004.
Next year’s growth will be boosted by the German government’s decision to move up 15.6bn Eur in tax cuts by a year to 2004, low European interest rates and by a recovering world economy, the institutes said in their twice-yearly survey of the outlook for the global and German economies.
"The reduced tax burden on households and improved sales prospects for businesses will support both consumption and investment," the report said.
Chancellor Gerhard Schroeder Tuesday (October 21) told business leaders gathered at a meeting of the industry association BDI that he also expects the early tax cut as well as measures to loosen rigid labor market regulation and other structural changes launched by his government to help kick start the Germany economy, Europe’s biggest.
But he said Germany was unlikely to beat the think tanks’ 2004 forecast.
"I’m sceptical that this can be reached due to the circumstances," Schroeder said. "But I think we shouldn’t rule it out from the start, and certainly make an effort."
