Minister forecasts cut in German growth

September 27, 2008 5:47:50 PM PDT
Germany will probably have to cut significantly its economic growth forecast for 2009 amid fallout from the global financial crisis, the country's economy minister was quoted as saying Saturday.The German government currently predicts that gross domestic product in Europe's biggest economy will grow by 1.2 percent next year, following growth of 1.7 percent in 2008.

Economy Minister Michael Glos was quoted as telling the Bild daily that the financial crisis will pose an "endurance test for Germany."

"We will probably have to revise our forecast for next year significantly downward," he said, according to the report.

He did not elaborate - and neither did Finance Minister Peer Steinbrueck, who said in a separate interview with the weekly Der Spiegel that "2009 is likely to be significantly worse than the 1.2 percent growth estimated so far."

The U.S. "is in intensive care with pneumonia," Steinbrueck was quoted as saying. "And that means that we here in Europe could at least get a heavy cold."

The German economy shrank for the first time in nearly four years in this year's second quarter as consumer spending and capital investment declined. The 0.5 percent contraction followed healthy growth of 1.3 percent in the first quarter.

On Wednesday, a closely watched survey showed German business confidence hitting a more than three-year low as manufacturers become increasingly pessimistic about their export prospects.