BCN-42 Germany slashes 2019 growth forecast (lead)

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ZCZC

BCN-42

GERMANY-ECONOMY-GROWTH

Germany slashes 2019 growth forecast (lead)

FRANKFURT AM MAIN, Jan 30, 2019 (BSS/AFP) – Berlin on Wednesday slashed its
economic growth forecast for 2019, saying it now expects only 1.0 percent
expansion for Germany compared with 1.8 percent previously.

After GDP growth of 2.2 percent in 2017 and 1.5 percent last year, Economy
Minister Peter Altmaier predicted a slowdown “largely due to the
international environment”.

An uncertain Brexit outcome, trade conflicts — especially with the United
States — and tax competition are weighing on the European powerhouse’s
prospects, he added.

Altmaier’s forecast confirms leaks last week to the German press and
follows a 0.6 percentage point reduction in the International Monetary Fund’s
(IMF) outlook for Germany, to 1.3 percent growth.

But the country can continue counting on strong domestic demand, with
unemployment expected to fall to 4.9 percent this year after 5.2 percent in
2018 — the lowest levels since reunification in 1990.

Meanwhile incomes are expected to rise 4.8 percent in 2019.

“Germany is on course for growth for the tenth year in a row. It’s the
longest upturn since 1966,” Altmaier said.

But the conservative politician, a close confidant of Chancellor Angela
Merkel, said a string of reforms were needed to reduce taxes and boost future
technologies like batteries for electric cars and artificial intelligence.

Ministers would bring a law before parliament “in the first half” of the
year to cut taxes, Altmaier said, although he has faced resistance from
junior coalition partners the Social Democratic Party (SPD).

Business and economically liberal politicians have been calling for tax
reform for years as Germany’s local, regional and federal governments have
booked one record surplus after another, reaching 59.2 billion euros ($67.7
billion) in 2018.

BSS/AFP/SR/1935 HRS