A pessimistic outlook for German economic growth has come from the country’s six leading economic research institutes. At a Berlin news conference they predicted improved growth in Europe’s largest economy this year, but they believe it will slow down next year due to reduced demand for goods and services from overseas along with continued weak domestic spending.Udo Ludwig from the Halle Economic Research Institute (IWH) said that could change depending on factors like the situation in Iraq becoming more stable and oil prices falling. He said exports could then be expected to rise, consumption in Germany would increase and there would be improved business confidence. The German economy showed a slight contraction last year of 0.1%. Because of strong exports the economists have raised their forecast for this year’s growth from 1.5% to 1.8% but they see it falling in 2005 to one point five per cent.
Now with high oil prices slowing down the world economy Germany’s exports are suffering, they fell in the third quarter of the year and they are what has been keeping the sluggish economy going.Despite the government’s efforts in lowering taxes as well as cutting jobless benefits and health care services, unemployment in Germany remains stubbornly high at 10.7% of the working population and that is holding back consumer spending.