ZCZC
BCN-13
GERMANY-EUROZONE-ECONOMY-GROWTH
German ‘wise men’ economists slash growth outlook
FRANKFURT AM MAIN, March 20, 2019 (BSS/AFP) – A revered panel of German
economists said Tuesday that slower exports and biting capacity limits had
prompted them to lower their growth forecast for the European powerhouse,
with a chaotic Brexit a further risk to the outlook.
Output would expand just 0.8 percent this year, said the five-strong “wise
men” group — which includes one woman — some 0.7 points lower than their
previous forecast.
“Significantly weaker export demand from key markets” was one brake on
expansion, the experts found, while “capacity constraints and existing labour
shortages in many sectors” weighed on the supply side.
“The boom in the German economy has faded,” chairman Christoph Schmidt
said, although “given the robust domestic economy, a recession is currently
not to be expected.”
The group’s slashed expectations follow similar downgrades from Berlin,
international organisations and private think-tanks.
The federal government’s January projections called for 1.0 percent
growth, while the International Monetary Fund (IMF) forecast that month was
more optimistic at 1.3 percent.
Looking further ahead, the council’s 2020 outlook is much stronger, at 1.7
percent — but the economists highlighted “very high” risks to growth.
“The uncertain outcome of the Brexit negotiations, the unresolved trade
conflict between the United States, Europe and China, as well as the danger
of a stronger-than-expected slowdown of the Chinese economy” could all deal
new blows to the forecast, they said.
In particular, “a spiral of protectionist measures would have the
potential to slide the German economy into recession,” the experts warned.
BSS/AFP/HR/0955