Germany expects economic growth

German Finance Minister Hans Eichel expects economic growth of two percent for 2004, despite doubts among experts and within his own ministry that the forecast is too optimistic, according to a media interview.

    German minister hopeful
    economy will rebound

    He told the “Die Welt” newspaper that attaining a growth of two percent in 2004 would enable Germany to respect the rules of the European Union's stability pact, which oblige the 12 nations using the euro to keep their public deficits within three percent of gross domestic product (GDP).

     

    "Economists also say our measures are a good basis for reaching the two-percent growth we forecast for 2004," Eichel said.

      

    "If we apply our reform programme to the 2004 budget successfully and completely and we bring forward the tax cuts by a year, we can set ourselves the goal of respecting the (euro-zone) stability criteria via growth," Eichel told the paper.

     

    Berlin is relying on two-percent growth in 2004 to offset the financial impact of a vast programme of economic and social reforms, including plans to accelerate tax cuts it hopes will stimulate the economy.

     

    He said the government still aimed "to balance the budget as swiftly as possible" but that it was "nonsense" to set a deadline for achieving that goal.

     

    Stagnant

      

    Germany needs growth, stable social security schemes and cuts in subsidies, he explained.

     

    Growth in Europe's biggest economy has been stagnant for the last two years, and the German government is officially predicting 0.75 percent growth in gross domestic product for 2003.

      

    Economic forecasting institutes are much more pessimistic than the government. Several predict zero growth next year, while some expect a rise in 2004 of only 1.3 percent.

      

    Germany's deficit shot up to 3.6 percent of GDP last year and looks likely to exceed the euro-zone ceiling again both in 2003 and 2004.

      

    As a result, the European Commission, the EU's executive arm, has imposed on Berlin an "excessive deficit procedure" -- a set of recommendations that Germany must follow to avoid multi-billion-euro fines.


    YOU MIGHT ALSO LIKE

    Survivor stories from Super Typhoon Haiyan

    Survivor stories from Super Typhoon Haiyan

    The Philippines’ Typhoon Haiyan was the strongest storm ever to make landfall. Five years on, we revisit this story.

    How Moscow lost Riyadh in 1938

    How Moscow lost Riyadh in 1938

    Russian-Saudi relations could be very different today, if Stalin hadn't killed the Soviet ambassador to Saudi Arabia.

    We Are Still Here: A Story from Native Alaska

    We Are Still Here: A Story from Native Alaska

    From Qatar to Alaska, a personal journey exploring what it means to belong when your culture is endangered.