Today's Coming Crisis Movie

Thursday, October 13, 2011

Slowdown in the German economy is predicted

Eight leading European economic institutes have forecast a steep slowdown for Germany's economy.

The eight think-tanks make a twice-yearly aggregate forecast of German growth.

Six months ago they predicted 2% growth for next year, but they have now cut that to 0.8%, blaming the debt crisis in the eurozone.

Slow growth in Germany makes it much harder for the rest of Europe to avoid a return to recession.

The German economy grew 3.6% last year.

"The debt crisis in Europe is threatening to become a banking crisis, which is increasingly weighing on the German economy too," the institutes said in a statement.

The forecasts come from six German think-tanks: IWH, Kiel Economics, Ifo, IfW, RWI and ZEW as well as Zurich's KOF and Vienna's IHS.

They attribute the deterioration in their forecasts to a "clear rise in uncertainty", which will "dampen domestic demand".

They are also concerned that economic problems among Germany's trading partners will hit its exports.

Strong exports have allowed Germany to fare better than its European partners in the downturn so far. source