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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Box-By-The-Riviera™ who wrote (5769)	7/11/2001 12:57:53 AM
From: smolejv@gmx.net	Read Replies (1) \| Respond to of 74559

Germany in bad shape says DIW - lead article in SZ 11.07 QUOTE Germany / politics 10,07,2001 20:44 Forecast: The German economy threatens a standstill The worst economic situation since the recession year 1993 threatens the German economy. A number of business experts have corrected their forecasts again clearly downward. By Ulf Brychcy (SZ of 11.07.2001) “It’s not very far from here to stagnation”, said DIW economic situation expert Gustav Adolph Horn. Federal Minister of Finance Hans Eichel (SPD) and Federal Minister for Economic Affairs Werner Mueller (non-party) rejected the prognoses. Both Ministers continue to count on a plus of two per cent. In the second half-year the economy is clearly to recover. The Federal Government holds to its optimism regarding the economic development, yet the latest economic situation prognoses shook it up. The down slope of market conditions is unchanged and it is starting to affect the job market. The German institute for economic research (DIW) expects a growth of one per cent in this year only. At the beginning of the year the scientists from Berlin still forecast the gross domestic product would increase by 2,5 per cent. Similar pessimism has been expressed by the International Monetary Fund (IWF), which predicts a plus of only 1,25 per cent for the economy of the German Federal Republic. Thus the worst economic situation since 1993 threatens the country. In that year the economy even contracted. It is especially serious that the German economy will probably grow again clearly less than the average growth of the European Union countries, which DIW rated this year as 1,9 per cent. The IWF counts the twelve countries of the euro zone to grow between two to 2.5 per cent, so Germany would clearly be below the EU average. Criticism of Eichels austerity course The disappointing numbers again kindled the controversy over the politico-economic counter measures. Above all Minister of Finance Eichel (SPD) is again in the center of attention because of his austerity policies. The managing director of the Federal association of the German industry (BDI), Ludolf von Wartenberg, accuses Eichel of consolidating the household at the expense of the investments. This involves particularly the traffic infrastructure and the German Federal Armed Forces. The defficiencies are obvious. Too much is spent on the consumption and too little on investments, said Wartenberg. The BDI addressed an appeal to the Members of the Bundestag to make sure the parliamentary procedure produces a 2002 budget with a future. On top of that the industry stresses the need for a partial speed-up of the tax reform. The German institute for economic research (DIW) also expressed criticism. To avoid harming national economy, Eichel must accept a higher budgetary deficit this year. The institute referred to the other large countries in the euro zone, which would, due to the similarly disappointing economic situation, likewise have to deviate clearly from their deficit targets. The German Minister of Finance may not adjust the economic situation-conditioned shortfalls in revenue, at an expected value of 4.5 billion Marks, by new savings measures. Otherwise the already unstable economic development will weaken additionally, said DIW economist Horn. The Berlin scientists reject economic revitalization programs, which so far have been requested only by some SPD state politicians and trade unionists, as useless actionism. I don’t want to just drive around Eichel and minister of economics Mueller contradicted the pessimistic numbers of DIW and IWF. The two politicians hold to the official expectation by the red-green Federal Government of presently two per cent growth. “I just don’t want to drive around following forecasts that change almost weekly”, said Eichel at the edge of a meeting of the EU Ministers of Finance in Brussels. The economy will again pull up in the coming six months, forecast the Social Democrat. He justified his optimism among other things by the fact, that the inflation is past its peak by now. Federal Minister of Labor Walter Riester (SPD) reacted likewise in a stressed left to expectations corrected downward, which will have also an unfavorable effect on the job market. He announced additional job-promoting measures, mentioning as an example the job-active law, which is to be passed after the summer break. The target of the Federal Chancellor to lower the number of the unemployed persons 2002 to 3.5 million considers Riester as realistic. DIW president Klaus Zimmermann does not believe that the Federal Government will achieve this self-imposed target . The weak economic situation is the principal reason, why in this year unemployment will even rise slightly. The improvements in job situation since January have been meager, said Zimmermann. As a result the annual average might then end at approximately 3.8 million jobless. UNQUOTE unauthorized translation dj